What is the main relationship between borrowing and interest rates?

The main relationship between borrowing and interest rates is that people tend to borrow more when interest rates are low and less when rates are high. This is primarily due to the cost of borrowing, which is determined by the interest rate. When rates are low, the cost of repaying a loan is cheaper, making it more attractive for individuals and businesses to take out loans for various purposes, such as buying homes, financing education, or investing in business expansion. Conversely, when interest rates are high, the cost of borrowing increases, leading to less borrowing because the repayment burden becomes higher.

This relationship is critical in economic theory, as it directly influences consumer spending and investment levels in the economy. Lower borrowing costs can stimulate economic activity, while higher rates generally slow it down. The other options do not accurately reflect this fundamental economic principle.