If interest rates increase, business investment expenditures are likely to ________ and consumer durable expenditures are likely to ________.

A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease

Interest Rates

The cost of borrowing money expressed as a percentage of the loan amount, typically noted on an annual basis.

Business Investment

The allocation of resources by businesses into areas with the expectation of earning future returns, such as buying new equipment or expanding operations.

Consumer Durable Expenditures

Spending by consumers on long-lasting goods (durables) such as cars, appliances, and furniture that are expected to be used for several years.