What effect do lower interest rates generally have on consumer behavior?

Lower interest rates generally decrease the cost of borrowing, which makes loans more affordable for consumers. When interest rates are lower, individuals can borrow money at a reduced cost, leading to increased spending on big-ticket items such as homes, cars, and other consumer goods. This enhanced ability to borrow encourages consumers to take out loans they might have otherwise avoided at higher interest rates, thus promoting overall spending in the economy.

Additionally, with cheaper loans, consumers are more likely to invest in opportunities that involve financing, potentially leading to increased consumption and investment. This behavior can stimulate economic growth, as higher consumer spending drives demand for goods and services, ultimately benefiting businesses and the economy as a whole.