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Questions and Answers
What is the impact of high interest rates on household saving?
What is the impact of high interest rates on household saving?
- Households find it worthwhile to save as savings earn more (correct)
- Households tend to spend more and save less
- Households prefer to invest in stocks rather than saving
- High interest rates have no impact on household saving
How do low interest rates affect borrowing by firms for investment projects?
How do low interest rates affect borrowing by firms for investment projects?
- Firms reduce their investments due to low interest rates
- Firms borrow more for investment projects because borrowing is inexpensive (correct)
- Firms rely on internal funds rather than borrowing at low interest rates
- Low interest rates have no impact on borrowing by firms
What is the impact of high interest rates on borrowing by firms?
What is the impact of high interest rates on borrowing by firms?
- High interest rates discourage firms from borrowing (correct)
- High interest rates lead to aggressive borrowing by firms
- High interest rates encourage firms to borrow more for long-term projects
- High interest rates have no impact on borrowing by firms
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