How Do Interest Rates Affect Consumption in the Economy

Multiple Choice

How do interest rates affect consumption in the economy?

A) Lower interest rates encourage consumers to save more money, and thus consumption rises.
B) Lower real interest rates imply a lower opportunity cost of consumption, and thus consumption rises.
C) Higher interest rates encourage consumers to increase financed purchases, and this encourages consumption.
D) Higher interest rates make it more expensive for firms to take loans, and so consumption falls.