Interest rates are crucial in determining economic outcomes from "summary" of The Economics of Money, Banking and Financial Markets, eBook, Global Edition by Frederic S. Mishkin
Interest rates play a significant role in shaping the overall economic landscape. The level of interest rates influences consumer spending, business investment, and the overall health of the economy. When interest rates are low, consumers are more likely to borrow money to make purchases such as homes or cars, stimulating economic activity. On the other hand, when interest rates are high, borrowing becomes more expensive, leading to a decrease in consumer spending and slowing down economic growth. Moreover, interest rates impact business investment decisions. Lower interest rates make it cheaper for businesses to borrow money to expand operations or invest in new projects. This increased investment can lead to job creation and economic growth. Conversely, higher interest rates can deter businesses from borrowing, resulting in a decrease ...
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