If the interest rate is decreased in an economy, it will
decrease the consumption expenditure in the economy
Incorrect Answerincrease the tax collection of the Government
Incorrect Answerincrease the investment expenditure in the economy
Correct Answerincrease the total savings in the economy
Incorrect AnswerExplanation:
If interst rate in an Economy is decresed then it will unlock more funds in an economy as funds will be available at a cheaper rate of interst. This will increase the investment expenditure in economy as more capital is available.
Money borrowed on interst is not kept as saving as it will decrease the value of money in real sense.
Increase in tax collection also has no direct and immediate linkage with decrease in intert rate. It can be true over a longer period of time.
Consumption will definitely increase in economy as increased investment expenditure requires consumtion
So, correct option is Option 3 i.e.increase the investment expenditure in the economy
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