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If the interest rates are decreased in the economy, it will
  • a)
    increase the expenditure in the economy
  • b)
    increase the total savings in the economy
  • c)
    decrease expenditure in the economy
  • d)
    increase tax collection of the government
  • e)
    None of these
Correct answer is option 'A'. Can you explain this answer?
Most Upvoted Answer
If the interest rates are decreased in the economy, it willa)increase...
If the interest rate is decreased in an economy, people will deposit less money in the banks and borrow more money, hence money supply in the economy will increase leading to more expenditure by the people.
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If the interest rates are decreased in the economy, it willa)increase the expenditure in the economyb)increase the total savings in the economyc)decrease expenditure in the economyd)increase tax collection of the governmente)None of theseCorrect answer is option 'A'. Can you explain this answer?
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