How do rising interest rates typically affect consumer spending, business investment, and the unemployment rate in an economy?

Rising interest rates usually mean that borrowing money becomes more expensive for consumers and businesses. When consumers face higher rates on loans and credit cards, they may decide to spend less on big purchases like cars or homes. Similarly, businesses might hold off on investing in new projects or expanding because loans for equipment or expansion become pricier. As spending decreases, businesses may earn less money, which can lead to layoffs or slower hiring, causing the unemployment rate to rise. For example, if a family is paying more in interest on their mortgage, they might cut back on dining out or vacations, impacting local businesses.