Question

Low interest rates result in:

a. Facilitating a greater supply of money for borrowers

b. Reducing the cost of financing the nfedral budget deficit

c. Encouraging a higher rate of savings

d. Bringing more investment avenues

E. Improve the standard kof living

Answer 1

a. Facilitating a greater supply of money for borrowers

Step-by-step explanation:

Interest rates represent the cost of borrowing money. Low interest implies a reduced cost of borrowing money. Households and firms will be encouraged to borrow more when interest rates are low.

Increased borrowing results in an increase in consumer spending and investments. The amount of money supply in the economy increases as individuals and businesses borrow.