Question

Multiple choice!

The U.S. economy is doing great! The price of goods is going up and there is an increase in demand. In this situation, what is the U.S. government most likely to do?

Decrease interest rates

Increase interest rates

Keep the interest rates the same

Answer 1

Answer: Increase interest rate

Step-by-step explanation:

Since there is inflation which is the increase in price of goods and there's an increase in demand, the government will most likely increase the interest rate.

This will be done in order to reduce the money in circulation and to minimize people borrowing money from financial institutions. Since the interest rate is increased, people nay also save more.

Therefore, the correct option is B.