Question

Why have interest rates been so low during the past decade and what alternative explanations that...

Why have interest rates been so low during the past decade and what alternative explanations that were given to explain it.

Homework Answers

Answer #1

Interest rates have been low in the past decades in order to encourage easy lending by the banks to the eligible businessmen, who could later invest the borrowed funds in their business and thus encourage investment and the overall growth of the economy. One alternative explanation that lower interest rates prevent the people from saving their money in their bank accounts or other financial instruments, and instead use them to consume more, thereby induce increase demand of goods in the economy. This increased consumption level would ultimately lead to increased national income levels.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Explain why interest rates in the United States have been so low.
Explain why interest rates in the United States have been so low.
What factors have been affecting EU/US trade Flows during the past decade?
What factors have been affecting EU/US trade Flows during the past decade?
Over the past several years, the Federal Reserve has kept interest rates very low. Discuss the...
Over the past several years, the Federal Reserve has kept interest rates very low. Discuss the policy the Federal Reserve is following and the reasons for this policy given the conditions in the economy. What are the risks of keeping interest rates very low? How do you think the low interest rates have affected saving in the economy?
Has monetary policy exerted a stabilizing impact on the U.S. economy during the past decade? Why...
Has monetary policy exerted a stabilizing impact on the U.S. economy during the past decade? Why or why not?
The Federal Reserve has kept interest rates low to encourage borrowing. Why have consumers not spent...
The Federal Reserve has kept interest rates low to encourage borrowing. Why have consumers not spent more money despite low interest rates?
Healthcare Policy in the United States has been largely consumed over almost the past decade by...
Healthcare Policy in the United States has been largely consumed over almost the past decade by Affordable Care Act. What were the various roles of the legislative, executive, and judicial branches in the initial implementation of the ACA? What has been the recent debate about the ACA and what legislative changes have been made to it?
1. Why do you think burn injuries have decreased over the past decade? 2. What are...
1. Why do you think burn injuries have decreased over the past decade? 2. What are the examples of thermal injury? 3. What are the young and elderly at increased risk of injury from burns? 4. Why is it important not to label traumatic events as "accidents'?
List the steps the Federal Reserve has taken over the past decade in order to increase...
List the steps the Federal Reserve has taken over the past decade in order to increase the growth rate in the personal consumption expenditures deflator. Why have these actions been unable, so far, to raise the inflation rate up to the Fed's 2% annualized target?
Is it better for an economy to have relatively low interest rates to encourage more borrowings...
Is it better for an economy to have relatively low interest rates to encourage more borrowings or is it better to have relatively high interest rates to encourage savings? Why?
Why would low policy rates suggest low long-term interest rates? A simple answer- less than a...
Why would low policy rates suggest low long-term interest rates? A simple answer- less than a paragraph
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT