Interest rates FALL sharply. What is the most likely effect on a business selling kitchens?

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Question

Interest rates FALL sharply. What is the most likely effect on a business selling kitchens?

Accepted Answer

Demand rises, because borrowing to fund home improvements becomes cheaper — Award 1 mark. Lower rates reduce the cost of the credit customers use for large purchases, and they cut the business's own borrowing costs at the same time. Falling rates make saving less attractive rather than more, so money tends to be spent.

Answer

Its existing loan repayments rise immediately

Answer

Demand falls, because customers prefer to save

Answer

It becomes legally obliged to expand

Answer

Demand rises, because borrowing to fund home improvements becomes cheaper

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