In which economic situation would interest rates decrease?

Question

(1 point)
O Most people are saving rather than buying houses.
O Average families are choosing to invest in new businesses.
O High consumption is driving a surge in the services sector.
O Increased job stability is encouraging workers to make big purchases.

Answer 1

Interest rates typically decrease in response to economic situations where there is lower demand for borrowing or when monetary policy is aimed at stimulating economic activity. Among the options provided, the most likely situation where interest rates would decrease is:

O Most people are saving rather than buying houses.

When people are saving more and not engaging in borrowing (such as to buy houses), this can lead to lower demand for loans, prompting a decrease in interest rates as lenders adjust to the reduced demand. The other options suggest a more active borrowing environment, which could lead to increased demand for loans and potentially higher interest rates.