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If interest rates rise, Group of answer choices households are willing to borrow more money because their rates of return have increased. foreign entities are willing to borrow more money because their rates of return have increased. firms are willing to borrow less money because their costs of borrowing has increased. firms are willing to borrow more money because their rates of return have increased. it must mean that inflation has decreased because nominal rates have increased.

Respuesta :

Parrain

Answer: firms are willing to borrow less money because their costs of borrowing has increased.

Explanation:

Cost of borrowing refers to the interest rates that a borrower will have to pay on the loan they have borrowed.

If interest rates increase in the economy therefore, the cost of borrowing will increase and companies aim to keep costs as low as possible. This will lead to them borrowing less money so as not to incur the increase interest charges.