If the interest rate is decreased in an economy, it will
Detailed Explanation:
When interest rates decrease, the cost of borrowing falls, making loans cheaper for businesses and entrepreneurs.
This encourages firms to take credit for capital investment in machinery, equipment, infrastructure, and expansion projects, thereby increasing investment expenditure in the economy.
Lower interest rates also reduce returns on savings (making saving less attractive) and stimulate consumption through cheaper EMIs, but the most direct and significant impact is on investment decisions by businesses.
Question 12 of 17 Monetary Policy
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