Which of the following statements describes a cause-and-effect relationship between economic factors?a) The government should invest more in renewable energy.b) An increase in interest rates will likely lead to decreased borrowing.c) Recycling is an important way to protect the environment.d) A free market is the most efficient economic system.
Question
Which of the following statements describes a cause-and-effect relationship between economic factors?a) The government should invest more in renewable energy.b) An increase in interest rates will likely lead to decreased borrowing.c) Recycling is an important way to protect the environment.d) A free market is the most efficient economic system.
Solution
The statement that describes a cause-and-effect relationship between economic factors is: "b) An increase in interest rates will likely lead to decreased borrowing." This statement shows a direct cause (increase in interest rates) and effect (decreased borrowing) relationship. When interest rates increase, the cost of borrowing also increases. As a result, individuals and businesses are less likely to take out loans, leading to a decrease in borrowing.
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