Answer:
Yes, an increase in the rate of interest will reduce consumer expenditure
Explanation:
Increase in the rate of interest means loans become expensive. This will discourage borrowing. This in turn reduces the money in the hands of people therefore reducing their consumption
Interest rates affect the cost of borrowing money over time, and so lower interest rates make borrowing cheaper. As a result, an increase in the rate of interest will reduce consumer expenditure.
The amount of interest due each period expressed as a percentage of the amount lent, deposited, and borrowed is known as an interest rate. The total interest on a loaned or borrowed sum is determined by the principal amount, the interest rate, the frequency of compounding, and the period since the loan, deposit, or borrowing took place.
The amount the lender charges per borrower are called an interest rate, and it is expressed as a percentage of a principal or the loaned amount. Typically, a loan's interest rate is expressed as an annual percentage rate or APR.
For instance, if you borrowed $100 at 5% interest, your repayment to the lender would be 105 dollars. The moneylender will profit $5. Throughout your life, you may discover various kinds of interests. Every loan has a unique interest rate, that will have an impact on how much you ultimately owe.
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