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If the domino effect occurs as a result of changes in the money supply, what will most likely happen as an immediate result of interest rates being increased?
Borrowing will decrease.
Investing will decrease.
Inflation will increase.
Liquidity will increase.
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Answered by
GPT-5 mini
AI
Borrowing will decrease.
Raising interest rates makes loans more expensive, so consumers and firms cut back on borrowing (and thus on interest-sensitive investment), while liquidity and inflation typically fall rather than rise.
Raising interest rates makes loans more expensive, so consumers and firms cut back on borrowing (and thus on interest-sensitive investment), while liquidity and inflation typically fall rather than rise.
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