Practicing Success

Target Exam

CUET

Subject

Business Studies

Chapter

Business Environment

Question:

How do low longer-term interest rates impact construction companies and automobile manufacturers?

Options:

Result in increased spending by consumers

Decrease demand for products and services

Have no impact on consumer behavior

Increase costs for businesses

Correct Answer:

Result in increased spending by consumers

Explanation:

Short and long-term interest rates significantly affect the demand for product and services. For example, in case of construction companies and automobile manufacturers, low longer-term rates are beneficial because they result in increased spending by consumers for buying homes and cars on borrowed money.