Question

What are some economic conditions that affect the cost of money?

What are some economic conditions that affect the cost of money?

Homework Answers

Answer #1

Some of the economic conditions that can affect the cost of money would include the following:

  • Federal Reserve policies that is prevalent in the country.
  • When there are budget deficits/surpluses in the budget that is released by the government can impact the value of money.
  • Level of business activity that is happening. If there is sound business activity it can have a good money value when compared to the currencies of other nation & vice versa.
  • International trade deficits or surpluses: this refers to the imports & export transactions that the nation deals with other countries can also have an impact on the cost of money of the respective nation.
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