Question

Which of the following may not be indicated by low long-term interest rates?

Answer 1

I believe that the answer is C- That consumers want to borrow money to invest

Answer 2

The third alternative is correct (C).

The interest rate is the price of money. It is from the value of the interest rate that investors decide whether to invest in the productive sector or in the financial sector.

If the projection of the long-term interest rate is low, this is a stimulus for companies to take low-cost loans. This is a positive sign on the health of the economy, which suggests that there will be a period of expansion.

However, the low interest rate is not an incentive for consumers to borrow money, as incomes will be lower. In this way, it would be better to invest in the productive sphere, for example to create a company or a store.