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Interestt Rates!!!hellpp!!!! watch

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    okay- if new, interest rates are set- higher ones- what is the impact upon the economy? could someone break it down in to bullet points?

    thanks
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    bump* i need help too
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    bump*
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    money is more expensive to borrow => less borrowing => slows down economy/growth

    "hot money" is attracted from abroad by the higher interest rates => more demand for currency => higher exchange rate
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    For what level? GCSE? A-level? Degree?
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    (Original post by Bax-man)
    For what level? GCSE? A-level? Degree?
    a-level going on degree
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    PS Helper
    I guess you need to look at the effects on things like:

    Inflation
    Growth
    Employment
    Balance of Payments
    Exchange rate
    etc.
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    higher interest rates --> more savings --> more investment
    higher interest rates --> less borrowing --> less spending --> lower inflation, lower economic growth, more unemployment
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    (Original post by *mental_person*)
    okay- if new, interest rates are set- higher ones- what is the impact upon the economy? could someone break it down in to bullet points?

    thanks
    - saving is more attractive due to a higher return,
    - loans become less attractive because of higher repayments,
    - disposable income decreases due to higher mortgage payments,
    - investment levels will decrease due to a lower return,
    - consumption ultimately declines.
 
 
 
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Updated: July 16, 2009
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