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QuizMultiple Choice

Banking — Quiz

Question 1 • Economics

Which statement best describes the effects of low and high interest rates on the economy?

Answer
A
High interest rates discourage consumers from investing, while low interest rates encourage investment.
B
Low interest rates encourage consumers to invest, while high interest rates discourage investment.
C
High interest rates encourage consumers to borrow and spend, while low interest rates encourage saving.
D
Low interest rates encourage consumers to borrow and spend, while high interest rates encourage saving.

Explanation

Low interest rates make borrowing cheaper, so consumers are more likely to take out loans and spend money. High interest rates make saving more rewarding and borrowing more expensive, encouraging people to save instead. Thus, the best statement is that low rates encourage borrowing and spending, while high rates encourage saving.

AI-written and checked against the verified answer.

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