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The Federal Reserve lowers interest rates during a recession in hopes to spark economic activity (aka consumer spending).

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16y ago

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Why did housing starts begin declining in 1987?

housing starts began slowly declining in 1987, as interest rates edged upward, and the U.S. economy began to fall into a recession.


What happens to bonds when interest rates fall?

When interest rates fall, the value of existing bonds increases. This is because the fixed interest rate on the bond becomes more attractive compared to new bonds issued at lower rates.


How do interest rates affect corporate bond value?

When interest rates rise, bonds lose value; when interest rates fall, bonds become more attractive.


What prices fall as interest rates rise?

A bond


Bond prices and interest rates are directly or positively related?

The price is inversely related to yields (interest rates). This means as rates rise, prices fall.


Are Bond prices and interest rates are directly or positively related?

The price is inversely related to yields (interest rates). This means as rates rise, prices fall.


Did interest rates fall during Reagan presidency?

No they were the highest they have ever been at almost 20% The above answer is entirely incorrect. Historically, interest rates in the United States have never reached as high as 20 percent. Before Reagan took office Jimmy Carter had ran up interest rates to 14.76%. When Reagan left office in 1988 interest rates were down to 10%.


Why do real estate prices tend to increase when interest rates fall?

Because with lower interest rates, the cost of borrowing money is less.


During the recession of 1937 about how did stock market prices fall?

About 48 percent


How do changes in interest rates impact the relationship between bonds and their value?

Changes in interest rates have an inverse relationship with bond values. When interest rates rise, bond values decrease, and when interest rates fall, bond values increase. This is because existing bonds with lower interest rates become less attractive compared to new bonds with higher interest rates.


During the recession of 1937 about how low did stock market prices fall?

About 48 percent


During the recession of 1937 how low did stock market prices fall?

About 48 percent