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When interest rates​ decrease, how might businesses and consumers change their economic​ behavior?.

User Napas
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8 votes

Answer:

When interest rates decrease, businesses and consumers will increase their selling and buying behavior, respectively. Businesses will be willing to sell or supply more since customers are willing to buy more. Businesses may also increase their products' prices since customers will be able and willing to pay more for the products and services. This is because, with low-interest rates, people are able to borrow more and spend more. A decrease in interest rates increases the amount of money in circulation, hence increasing customer spending. It also increases the amount supplied in the market by businesses and the amount produced by producers. However, a continued decline in interest rates may lead to inflationary issues.

User Prakhyat
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