Does a low interest rate encourage people to borrow or to save? Explain.(1 point)

Question

Responses

A low interest rate encourages people to save because interest rates are paid to savers by borrowers, so a low interest rate means a low opportunity cost for saving.
A low interest rate encourages people to save because interest rates are paid to savers by borrowers, so a low interest rate means a low opportunity cost for saving.

A low interest rate encourages people to borrow because interest rates are paid to borrowers by savers, so a low interest rate means a low opportunity cost for borrowing.
A low interest rate encourages people to borrow because interest rates are paid to borrowers by savers, so a low interest rate means a low opportunity cost for borrowing.

A low interest rate encourages people to save because interest rates are paid to borrowers by savers, so a low interest rate means a low opportunity cost for saving.
A low interest rate encourages people to save because interest rates are paid to borrowers by savers, so a low interest rate means a low opportunity cost for saving.

A low interest rate encourages people to borrow because interest rates are paid to savers by borrowers, so a low interest rate means a low opportunity cost for borrowing.

Answer 1

A low interest rate encourages people to borrow because lower interest rates mean that the cost of borrowing is lower. This makes it more attractive for individuals to take out loans or credit, as they can save money on interest payments. Additionally, low interest rates may indicate that the economy is performing well, which can also encourage borrowing as individuals have more confidence in their ability to repay loans.