Question

if the interest rate is increased in an economy it will ? a) increase the consumption expenditure in the economy b) increase the tax collection of the govt. c) decrease the investment expenditure in the economy d) decrease the total saving in the economy​

Answer 1

Explanation:

Higher interest rates tend to moderate economic growth. Higher interest rates increase the cost of borrowing, reduce disposable income and therefore limit the growth in consumer spending. Higher interest rates tend to reduce inflationary pressures and cause an appreciation in the exchange rate.