– How does it help an economy when a government lowers interest rates?

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Extremely non financially savvy person here. Is the idea that more people then get home loans, or there is less to pay back on credit cards? I keep seeing this and don’t quite understand.
Thanks so much.

In: Economics

7 Answers

Anonymous 0 Comments

Lower interest rates –> more borrowing (because money is cheap)

More borrowing –> more spending

More spending –> higher income/economic growth

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