Canadian Securities Course (CSC) Practice Exam

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Study for the Canadian Securities Course Exam with our comprehensive practice test. Explore flashcards and multiple-choice questions, each with detailed hints and explanations. Prepare for your CSC exam with confidence!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

What effect do higher interest rates typically have on the economy?

Boost investment
Encourage consumer spending
Lead to economic growth
Discourage consumer spending

The correct answer is: Discourage consumer spending

Higher interest rates actually tend to discourage consumer spending as it becomes more expensive to borrow money. Increased interest rates can lead to less consumer borrowing, which in turn can slow the economy and economic growth. On the other hand, it may encourage saving and decrease inflation, which can have positive effects on the economy in the long term. While higher interest rates may boost investment in certain sectors, it can also discourage businesses from borrowing money for expansion, resulting in a negative impact on economic growth. Higher interest rates can also make it more expensive for businesses to finance projects, making it less likely for them to take on new ventures and stimulate economic activity. Therefore, option D is the most accurate choice.