Question

Which of the following is affected by changes in interest rates and, as a result, impacts aggregate demand?

A. Business investment projects
D. The value of the dollar
C. Consumption of durable goods
D. All of the above

Answer 1

D

Step-by-step explanation:

Business investment projects , The value of the dollar and Consumption of durable goods

All these is affected by the changes in interest rates.

If the interest rates are rising or falling it will affect decisions taken by consumers and businesses. Lower interest rates will lower the borrowing costs for big-ticket items such as appliances, vehicles, and homes. Companies will be able to borrow at lower rates, This may lead to capital spending increases.

Higher interest rates increases the cost of loans for consumers and companies. Spending will tend to move at a slower pace, depending on the magnitude of the increase in rates.

If the value of the U.S. dollar falls or rises, foreign goods will become increase or decrease in expense. Meanwhile, goods made in the country. will become either cheaper or more expensive for foreign markets. Aggregate demand will, therefore, increase(or decrease.