ECONOMICS

Detailed explanation-1: -Lower interest rates encourage consumer spending; higher rates are likely to encourage saving and less borrowing. 4. A higher money supply will usually result in lower interest rates. A lower money supply will likely result in higher interest rates and reduced consumer spending.

Detailed explanation-2: -The lower the interest rate, the more willing people are to borrow money to make big purchases, such as houses or cars. When consumers pay less in interest, this gives them more money to spend, which can create a ripple effect of increased spending throughout the economy.

Detailed explanation-3: -Rising interest rates affects spending because the cost of borrowing money goes up. So, if you have a mortgage, any type of credit card or a loan, you could end up paying more for the money you originally borrowed. This will mean that you inevitably have less money to spend on goods and services.

Detailed explanation-4: -Interest rates affect the cost of borrowing money over time, and so lower interest rates make borrowing cheaper-allowing people to spend and invest more freely. Increasing rates, on the other hand makes borrowing more costly and can reign in spending in favor of saving.

Detailed explanation-5: -Higher incomes, lower interest rates, increasing wealth, and composition of wealth (liquid versus illiquid assets) may lead to increased consumer spending. Additionally, the prevalence of consumer credit and the ability of consumers to leverage housing wealth can also precipitate increased consumer spending.