Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Higher inflation usually leads to increased interest rates and more favorable trade agreements.
B
Higher inflation typically results in lower interest rates and less favorable trade agreements.
C
Increased inflation causes interest rates to rise, which can lead to deteriorated trade agreements.
D
Inflation has no significant effect on interest rates or trade agreements.
Understanding the Answer
Let's break down why this is correct
Answer
When inflation rises, it means that prices for goods and services are increasing, which can lead to higher interest rates. Central banks, like the Federal Reserve in the U. S. , often raise interest rates to control inflation. Higher interest rates make borrowing more expensive, which can slow down spending and investment in the economy.
Detailed Explanation
When inflation goes up, it usually causes interest rates to rise. Other options are incorrect because Some might think that higher inflation leads to better trade deals; This option suggests that inflation lowers interest rates.
Key Concepts
Inflation definition
Interest rates
International trade agreements
Topic
Inflation and Trade Effects
Difficulty
hard level question
Cognitive Level
understand
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