The Federal Reserve is set to increase interest rate to fight inflation. The following are some statements about the impact of higher interest rates on the economy. ho 1) Higher interest rates make borrowing more costly. 2) When interest rates are higher, people are less willing to finance investment and consumption with debt. Reduced demand from investors and consumers can help curb inflation. 3) Bond price will increase when the market interest rate (required return) increases. 4) Households will be more willing to refinance their mortgage to take advantage of the higher rates. 5) A savings account usually benefits from a higher interest rate because the saver can earn more interest income based on his/her savings. Which statement(s) above are correct? O 3, 4, and 5 O 2.3 and 5 O 1.2 and 5 1, 2, and 4