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 raise the opportunity cost of consumption, and thus consumption falls.
C) Higher interest rates discourage consumers from making financed purchases, and this lowers consumption.
D) Higher interest rates make it more expensive for firms to take loans, and so consumption falls.