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gladu [14]
4 years ago
7

Which of the following explains what would happen if a financial institution lowered interest rates?

History
1 answer:
Natasha_Volkova [10]4 years ago
7 0

Answer:

<em>The correct option is </em>

<em>D) business would borrow more</em>

Explanation:

Interest is the the amount of money individuals, business and even financial institutes (like commercial banks) pay to a lender, for borrowing money from the lender. Interest rate is the amount of interest added on the initial capital with time, at the end of the lending period; usually calculated in years or months. When interest rates are lowered by a financial institute, businesses are encouraged to borrow more from these financial institutes for business and production purposes because, the same interest budget can now be paid, for a larger amount of loan. <em>Simply put, the lower the interest rate, the lesser the interest that is paid on the loan, and the more businesses borrow from financial institutes.</em>

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