Shouldn’t it work in the reverse? If businesses are getting loans at higher interest rates shouldn’t they be doubling down on investments as a safety net?
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No, your interest rate is the cost of your loan. Let’s consider money to be a commodity. For X amount of money the cost is Y. If it becomes 2Y, then you are actually able to afford less amount of X.
If you have only $10 and the price of bananas went from $5 to $10, then previously you were able to afford 2 bananas and now you can only afford one.
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