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Having low interest rates as we have means the money supply in the economy is increased (as people have more available income) thereby allowing people to spend more which thus should have the impact of increasing demand. This in turn may mean the production of goods and services are also increased and the effect of this may be to employ more people (reduce unemployment). Also, when the interest rate is low people who want to loan money can easily do it since they don't have to pay much extra.
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How does the Fed lower interest rates?
In reality, the Fed does not lower interest rates. It lowers the rate charged to banks to borrow money. This usually results in a lowering of commercial rates.
When the federal reserve board lowers interest rates it most likely attempting to?
lower interest rates.
Are interest rates on long term bonds usually lower or higher than interest rates on short term bonds?
Higher
Would banks decrease or increase interest rates if they had less money to loan?
If banks had less money to loan they would increase their interest rates. This is because they would have to make the most profit off of the little money that they had to use. When banks have a lot of money to loan, interest rates are lower because they can still get a lot of interest even from the lower interest rates.
If the country is in a recession what will the government do to the interest rates to stimulate the economy?
lower
Would a short term monetary policy take most action in lower interest rates?
lower interest rates
How do people acquire building loans at lower interest rates?
People can get loans to purchase buildings with lower interest rates by shopping around for a good bank. You can also get lower interest rates by having good credit.
How can one lower your interest rates?
Some tips for lowering interest rates are these: pay the credit cards off in increments. By using payments on time it should lower the bill and interest rates quicker.
How does the Fed lower interest rates?
In reality, the Fed does not lower interest rates. It lowers the rate charged to banks to borrow money. This usually results in a lowering of commercial rates.
When the federal reserve board lowers interest rates it most likely attempting to?
lower interest rates.
How are interest rates being affected in the auto industry?
Higher interest rates mean that the demand for cars have increased, due to an increase in consumer demand. Lower interest rates mean that there is a lower demand and the FOMC is lowering the rates to increase consumer demand. Lower rates, however could also increase the demand for cars. This is why the Feds have to higher the interest rates, to ensure that the supply and demand are at an equilibrium point.
What tax advantages regarding interest rates?
The tax advantages regarding interest rates is that there are tax deductions for the interests payable. This would translate to repayment of lower interest rates.
Are interest rates on long term bonds usually lower or higher than interest rates on short term bonds?
Higher
Would banks decrease or increase interest rates if they had less money to loan?
If banks had less money to loan they would increase their interest rates. This is because they would have to make the most profit off of the little money that they had to use. When banks have a lot of money to loan, interest rates are lower because they can still get a lot of interest even from the lower interest rates.
Why do real estate prices tend to increase when interest rates fall?
Because with lower interest rates, the cost of borrowing money is less.
If the country is in a recession what will the government do to the interest rates to stimulate the economy?
lower
How do you eliminate the contractionary gap?
The government can lower taxes or interest rates.
