GyanGram
ATTEMPT · INDIAN ECONOMY · PRELIMS 2014
If the interest rate is decreased in an economy, it will
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If the interest rate is decreased in an economy, it will
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• Correct Answer: C
• Lower interest rates reduce the cost of borrowing for firms, incentivizing investment in capital, equipment, and expansion.
• Cheaper credit raises expected returns on investment projects.
• A, B, D are wrong: lower rates boost consumption, may reduce savings, and do not directly increase tax collection.
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