Please explain how higher interest rates helps reduce inflation? No matter what, people still have to buy shit. So how does high interest rates get people to spend less? People still need to buy homes, cars, food regardless of what the interest rate is. Those are kind of necessities, so shouldn’t the government do more to make it more affordable?
And if businesses are paying more for a product, then they have to charge the customer more. They can’t charge less just because people aren’t buying. If they do they won’t make any money themselves.
I’m confused. Please explain it to me.
In: Economics
Money spent buying bonds is effectively taking money out of circulation temporarily.
When businesses can’t get cheap loans they become more stringent with their budgets
No – price controls have never worked for the benefit of the general public
Economies are very complex; too much of a push in any direction will make things a lot worse
Latest Answers