Question

Does a low interest rate encourage people to borrow or to save? Explain.(1 point)
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 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 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 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 it makes borrowing cheaper and more affordable. With lower interest rates, the cost of borrowing decreases, leading to increased borrowing and spending. Additionally, low interest rates can signal a healthy and growing economy, which may further encourage people to take out loans for investments and purchases.