Which sequence best describes how lowering interest rates affects the economy in the scenario?

Which sequence best describes how lowering interest rates affects the economy in the scenario?

• A. Lower rates reduce borrowing costs, leading to more loans, higher spending, more production, more jobs
• B. Lower rates increase reserve requirements, slowing lending, reducing GDP
• C. Higher rates cause more loans because banks are more confident
• D. No impact on unemployment from rate changes

Answer: (A)