Asked by joseph onuorah on Jun 12, 2024
Verified
A lower equilibrium interest rate:
A) increases saving,reduces total spending,and increases total output.
B) decreases saving,increases total spending,and decreases total output.
C) increases investment,increases total spending,and increases total output.
D) decreases investment,decreases total spending,and increases total output.
Equilibrium Interest Rate
The interest rate at which the demand for money in an economy equals the supply of money, establishing a state of balance in the financial markets.
- Acquire knowledge about the impact of shifts in the equilibrium interest rate on economic activities.
Verified Answer
GC
Giovanni ChermontJun 14, 2024
Final Answer :
C
Explanation :
A lower equilibrium interest rate makes borrowing cheaper, which encourages more investment. This increase in investment leads to higher total spending in the economy. As spending increases, it can stimulate more production and thus increase total output.
Learning Objectives
- Acquire knowledge about the impact of shifts in the equilibrium interest rate on economic activities.