Question

If interest rates rise, Choose one: A. it will reduce consumption smoothing. B. foreign entities that are borrowers of funds will borrow less. C. governments that are savers of funds will save less. D. households that are savers of funds will save more. E. businesses that are savers of funds will borrow less.

Answer 1

Answer:

The correct answer is D.

Explanation:

An increase in the interest rate will encourage savers to put in more money to get more profit. The interest rate directly affects the amount of money these savers will receive in their deposit, increasing this amount over lower rates. Therefore, an increase in interest will directly affect an increase in the amount of deposits made by savers.

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