In which economic situation would interest rates decrease?

(1 point)
Responses

Most people are saving rather than buying houses.
Most people are saving rather than buying houses.

Average families are choosing to invest in new businesses.
Average families are choosing to invest in new businesses.

High consumption is driving a surge in the services sector.
High consumption is driving a surge in the services sector.

Increased job stability is encouraging workers to make big purchases.

1 answer

Interest rates typically decrease in an economic situation where there is less demand for borrowing or where the central bank aims to stimulate economic activity. In this context, the correct response would be:

Most people are saving rather than buying houses.

When more people are saving instead of borrowing to purchase homes, there is less demand for loans, which can lead to lower interest rates.