Would a change in the interest rates from 8% to 7% encourage a bank's customers to borrow more money? Explain.(1 point)
Responses
a No, it would not encourage more borrowing, because a lower interest rate means that they would have less interest to repay over the course of the loan.
b Yes, it would encourage more borrowing because a lower interest rate means that they would have less interest to repay over the course of the loan.
c Yes, it would encourage more borrowing because a lower interest rate means that they would earn more interest over the course of the loan.
d No, it would not encourage more borrowing, because a lower interest rate means that they would earn more interest over the course of the loan.
b Yes, it would encourage more borrowing because a lower interest rate means that they would have less interest to repay over the course of the loan.
When interest rates are lower, borrowing becomes more affordable for customers as they have to pay less interest on the loan. This can incentivize customers to take out more loans and borrow more money overall. Lower interest rates can stimulate borrowing and spending in the economy.