Which of the following would be most likely to lead to higher interest rates on all debt securities in the economy?
a. Households start saving a larger percentage of their income.
b. The economy moves from a boom to a recession.
c. The level of inflation begins to decline.
d. Corporations step up their expansion plans and thus increase their demand for capital.
e. The Federal Reserve uses monetary policy in an attempt to stimulate the economy.

Respuesta :

If corporations step up for diversifying the plans due to which the demand for capital should be increased so due to this there should be high-interest rate for all debt securities.

The following will be the reasons for decreasing the rate of interest:

  • If a household begins so it saves the income but at the same time, the rate of interest should be decreased also the money of supply is increased.
  • If the economy shifted from boom to recession period so the rate of interest should be decreased.
  • When inflation should be decreased, so the rate of interest should also be decreased.
  • When the monetary policy should be used so the rate of interest is also increased.

Therefore we can conclude that if corporations step up for diversifying the plans due to which the demand for capital should be increased so due to this there should be high-interest rate for all debt securities.

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