ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Explanation: When the interest rate in the market rises, more individuals or companies start looking for investments to get higher returns. This is because a higher interest rate will certainly provide a higher return on investment.

Detailed explanation-2: -Higher rates alter the equity investment landscape One is that it could affect future earnings growth for U.S. companies. “As the Fed tightens interest rates, we can expect a decline in economic growth, ” says Freedman. In fact, GDP growth slowed considerably in 2022, growing at 2.1% (compared to 5.9% in 2021).

Detailed explanation-3: -The correct answer is option D) rise. A decline in interest rates will lead to a decrease in the cost of borrowing funds, which in turn will encourage people to borrow more and increase spending on housing.

Detailed explanation-4: -In most cases, higher interest rates mean a stock market that declines in value. This is because when interest rates rise, companies will borrow less money. The result is their earnings will grow at a slower rate than investors anticipate. This has a ripple effect across all sectors of the stock market.