UPSC General Studies Solved Paper - General Studies-2014

  • question_answer
    If the interest rate is decreased in an economy, it will

    A)  decrease the consumption expenditure in the economy.

    B)  increase the tax collection of the government.

    C)  increase the investment expenditure in the economy.

    D)  increase the total savings in the economy.

    Correct Answer: C

    Solution :

    Exp. [c] A decreased interest rate would lead to cheaper loans, which would further help in increasing the investment expenditure by private players, as the loans would be cheaper. Thus, decreasing the interest rate in an economy would lead to an upward shift in the investment expenditure of the economy.

You need to login to perform this action.
You will be redirected in 3 sec spinner