Accounting Multiple Choice Question – 5 July 2025

Which of the following are the effects of reduced interest rates?

1 Consumer spending will increase
2 Business investment will be encouraged
3 Saving will increase

Select ONE answer:

1. 1 only
2. 1 and 2 only
3. 2 and 3 only
4. 1,2 and 3

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct == > Low interest rates will encourage spending rather than saving. Investment will be encouraged because the opportunity cost of investing is reduced.
3. Not correct
4. Not correct

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