Interest rates play a significant role in the economy from "summary" of Basic Economics by Thomas Sowell
Interest rates are not just numbers on paper – they have a profound impact on the economy as a whole. When interest rates are low, borrowing becomes cheaper, which encourages businesses and individuals to take out loans to invest in new projects or make purchases. This increased spending stimulates economic activity and can lead to growth in various sectors. Conversely, when interest rates are high, borrowing becomes more expensive, which can discourage businesses and individuals from taking out loans. This can slow down economic activity as businesses may postpone investments and consumers may cut back on spending. In this way, interest rates can influence the overall level of economic activity in an economy. Moreover, interest rates can also affect inflat...
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