Question

Relationship between interest rate and consumption

Answer 1

HEY DEAR

HERE IS YOUR ANSWER

Higher interest rates are thought to affect consumer spending through both substitution and income effects. Higher interest rates lower consumption through the substitution effect, because current consumption becomes expensive relative to saving--households reduce their spending today in favor of spending tomorrow.

I HOPE IT WILL HELPFUL TO YOU

PLEASE FOLLOW ME ON INSTAGRAM ID IS aa9838789. also follow in this app please please