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When interest rates decrease, how might businesses and consumers change their economic behavior?

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manhokwe tawanda
manhokwe tawandaLv10
19 Dec 2020

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Related questions

When interest rates​ decrease, how might businesses and consumers change their economic​ behavior?

a. Consumers and businesses will invest in bonds or similar debt instruments. 
b. Consumers and businesses will hold smaller (average) cash balances. 
c. Consumers and businesses will spend less and save more. 
d. There will be more consumption spending on interest-sensitive items and more investment by businesses.

 

1. When interest rates (IRs) decrease, how might businesses and consumers change their economic behavior?

2. If there is a decline in the money growth, what might you expect to happen to real GDP (real output) and inflation rate?

3. Is everybody worse-off when IRs rise?

4. Why do managers of financial institutions care so much about FED

When a country's currency depreciates, who benefits the most and who loses the most? Consider businesses, consumers and government. If you say businesses benefit, what type of businesses benefit the most? How does a change in the value of the dollar affect consumers? How does it impact prices and interest rates? Who benefits the most from an appreciating dollar? Also, consider whether it makes a difference if your discussion involves short-run and long-run analysis.

 

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