answersLogoWhite

0

Well you need to look at it from both the perspective of receiving interest payments and paying interest. In relation to paying interest, household savings generally decline with low rates. This is because when you are paying low interest rates on the things you purchase you are also receiving low rates on your savings. This usually has the affect of boosting the economy. If rates are low people are enticed to spend their money since a) they are getting a small return on their savings and b) borrowing money is costing them little.

When interest rates are high it generally increases household savings for exactly the opposite reasons low rates decrease savings. High interest rates when borrowing also mean higher rates for saving. Economies that are experiencing high rates of inflation will raise interest rates. Nobody wants to pay alot in interest so as rates climb they borrow less and save more. This is removing money from the economy and putting it into savings thereby slowing demand for goods and increasing supply. This will usually reign in inflation, and increase household savings.

User Avatar

Wiki User

13y ago

What else can I help you with?

Related Questions

Where can you find the best interest saving rates?

You can only find the best interest saving rates through comparison. First, you find interest rates from different company, and see which one offers the best.


Best saving account interest rates?

saving account interest rate is now 4% that is best


What has the author Jennifer Ma written?

Jennifer Ma has written: 'Education saving incentives and household saving' -- subject(s): Economic aspects, Economic aspects of Households, Education savings accounts, Households, Interest rates, Saving and investment


How do high interest rates affect consumption expenditure?

High interest rates will make saving more attractive to consumers than spending. They will get a higher return on their money if they save it, which leads them to put more of their money into saving. This leaves them with less money to spend resulting in lower consumption


What savings accounts have the best rates according to Money Saving Expert?

The saving accounts that have the best interest rates according to Money Saving Expert is a Sandantar account which has a astonishing 3% annual interest rate.


What usually carries the highest interest rates?

saving account


How do interest rates affect people's purchasing decisions?

High interest rates increase the cost on the ability to buy a house or a car.


Why did the Federal Reserve increase interest rates?

The Federal Reserve increased interest rates to control inflation and encourage saving and investment.


Why did the Federal Reserve raise interest rates?

The Federal Reserve raised interest rates to control inflation and encourage saving and investment.


How interest rate affect the sa economy?

how interest rates affect the sa economy


How does bankruptcy affect interest rates on loans and credit cards?

It cause interest rates to rise.


Disadvantages of saving money in a bank?

cannot invest. interest rates may drop the economic climate may affect it you will get ur monety back guarantedd

Trending Questions
What is the economic system of the US Called explain how it works? Utkarsh bought 20 dining tables for rupees Rs120000 and sold these at a profit equal to the selling price of 4 dining tables find SP of one dining tables? Can a business negatively affect society? What are three examples of price discrimination? How do you signal short-run in cricket? What is the substitute effect in economics and how does it impact consumer behavior? How did farm cooperatives help struggling farmers? Name the law that results from the requirement that all exchanges be voluntary? Which world region had a sharp decline in their economy that triggered the US economic expansion of the 1990s might not continue? A decrease in competition with in an industry can result in? When a firm is operating at an efficient scale? What is the process of starting an organization or business? What impact does the current global economic situation have on the future of y/l economics? How do substitutes and complements effect supply and demand? Why is open mining cheaper than deep mining? What is the basic difference between macroeconomics and microeconomics is? What is the average house price in Australia? What country is economy dominated by petroleum and has the largest oil reserve in the western hemisphere? define managerial economics? Will fair trade agreement have raised the quality of life for coffee producers so fair trader agreement could be used to help farmers as well will that be appeals to authority emotion or reason?