Asked by Ashley Armstrong on May 02, 2024
Verified
If interest rates decrease, business investment expenditures are likely to ______, and consumer durable expenditures are likely to _________.
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
E) be unaffected; be unaffected
Interest Rates
The price paid for the use of borrowed money or the earnings from an investment, represented as a percentage of the total amount invested or borrowed.
Consumer Durable
A category of consumer goods characterized by their long life span, such as appliances, vehicles, and furniture.
Business Investment
Expenditure made by businesses to purchase capital goods or services, aimed at furthering company growth and generating revenue.
- Evaluate the consequences of government policy decisions on the economy.
Verified Answer
BG
Bruno GuimaraesMay 09, 2024
Final Answer :
A
Explanation :
When interest rates decrease, it becomes cheaper for businesses to borrow money for investment, leading to an increase in business investment expenditures. Similarly, lower interest rates make financing more affordable for consumers, boosting their spending on durable goods.
Learning Objectives
- Evaluate the consequences of government policy decisions on the economy.