Economics, Econometrics and Finance
8 years ago

Rising interest rates intensify inflation, while falling rates reduce it.

Elsevier eBooks
The two rates: (2) Interest
J.W.C. CUMES

Paper Summary

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The rate of interest plays a big role in the economy, affecting consumer spending and inflation. When interest rates go up, it can lower spending on big purchases that rely on credit, but other spending might increase. This can also impact production costs and inflation. On the other hand, when interest rates go down, it can reduce inflation. So, changes in interest rates can have a ripple effect on the economy.