If the Interest Rate Increases, Then

Multiple Choice

If the interest rate increases, then

A) households will decrease their level of saving.
B) the supply of loanable funds will fall because it now costs more to borrow funds and people who were supplying the funds will realize that fewer people will be willing to borrow their funds.
C) households will consume less and save more.
D) government will consume more because it now costs more to borrow funds to buy goods.
E) a, b, and d