One disadvantage of an environment of low interest rates is that

A) prices tend to fall too fast.

B) market volatility scares away investors.

C) people have less incentive to save money in banks.

D) investments in stocks and other securities becomes less attractive.

Question

Social Studies

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1 February, 05:49

One disadvantage of an environment of low interest rates is that

A) prices tend to fall too fast.

B) market volatility scares away investors.

C) people have less incentive to save money in banks.

D) investments in stocks and other securities becomes less attractive.

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Answers (1)

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Katelyn · Answer 1

One disadvantage of an environment with low interest rates is Option C) people have less incentive to save money in banks.

Explanation:

Low interest rates make it cheaper to borrow money so people are more likely to take loans. However, this also leaves less incentive for people to save money because the interest paid on a savings account is low. Banks also lose income when the interest rates are low because they are making less money on interest charges and the costs of borrowing money are lower for the consumer, so this means fewer profits for the bank.

One disadvantage of an environment of low interest rates is thatA) prices tend to fall too fast.B) market volatility scares away investors.C) people have less incentive to save money in banks.D) investments in stocks and other securities becomes less attractive.

One disadvantage of an environment of low interest rates is that

A) prices tend to fall too fast.

B) market volatility scares away investors.

C) people have less incentive to save money in banks.

D) investments in stocks and other securities becomes less attractive.