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Sequence the situations that take place in the economy when financial institutions increase the interest rate.

- Business shies away from borrowing from the bank
- Production cost increases
- Price of finished goods increases
- Demand for finished goods decreases
- Consumer spending goes down

1. Business shies away from borrowing from the bank
2. Production cost increases
3. Price of finished goods increases
4. Demand for finished goods decreases
5. Consumer spending goes down



Answer :

GinnyAnswer

Final answer:

Financial institutions raising interest rates affect production costs, demand for goods, borrowing behavior, prices, and consumer spending.


Explanation:

Financial institutions increasing the interest rate in the economy leads to various consequences:

  1. Production costs increase.
  2. Demand for finished goods decreases.
  3. Businesses tend to shy away from borrowing from the bank.
  4. The price of finished goods increases.
  5. Consumer spending goes down.

These changes reflect the impact of interest rate fluctuations on different aspects of the economy.


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