An increase in interest rates results in

A) increased consumption and decreased savings.
B) increased savings and decreased consumption.
C) an increase in autonomous consumption.
D) an increase in the durable goods expenditures.

An increase in interest rates makes saving more attractive compared to consumption, leading to increased savings and decreased consumption. This is because the cost of borrowing increases, making it more expensive to finance consumption, while the return on saving (interest income) also increases, making it more attractive to save. Therefore, individuals and firms tend to save more and spend less as interest rates rise.