Answered

Westonci.ca is your go-to source for answers, with a community ready to provide accurate and timely information. Ask your questions and receive precise answers from experienced professionals across different disciplines. Experience the ease of finding precise answers to your questions from a knowledgeable community of experts.

Sequence the situations that take place in the economy when financial institutions increase the interest rate:

1. Business shies away from borrowing from the bank.
2. Production cost increases.
3. Price of finished goods increases.
4. Demand for finished goods decreases.

Sagot :

GinnyAnswer

Final answer:

Increasing interest rates in the economy lead to higher production costs, reduced demand for finished goods, reluctance in business borrowing, and increased prices of finished goods.


Explanation:

Effects of Increasing Interest Rates in the Economy:

  1. Production cost increases: When financial institutions raise interest rates, businesses face higher costs of borrowing and production, reducing their profitability.
  2. Demand for finished goods decreases: Due to increased costs, businesses cut back on production, leading to a decrease in the demand for finished goods.
  3. Business shies away from borrowing: Higher interest rates deter businesses from borrowing money from banks, impacting their investments and expansion plans.
  4. Price of finished goods increases: With reduced supply and decreased demand, the equilibrium price of finished goods rises.

Learn more about Effects of increasing interest rates in the economy here:

https://brainly.com/question/33992494


Thank you for your visit. We're dedicated to helping you find the information you need, whenever you need it. We appreciate your time. Please come back anytime for the latest information and answers to your questions. Your questions are important to us at Westonci.ca. Visit again for expert answers and reliable information.