Answered

Looking for reliable answers? Westonci.ca is the ultimate Q&A platform where experts share their knowledge on various topics. Explore thousands of questions and answers from knowledgeable experts in various fields on our Q&A platform. Our platform offers a seamless experience for finding reliable answers from a network of knowledgeable professionals.

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


We appreciate your visit. Our platform is always here to offer accurate and reliable answers. Return anytime. Thank you for choosing our platform. We're dedicated to providing the best answers for all your questions. Visit us again. We're glad you visited Westonci.ca. Return anytime for updated answers from our knowledgeable team.