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Question: Are economists wrong in saying that consumption depends negatively on interest rate? (5 marks)
The economists are not “wrong†in claiming consumption depends negatively based on interest rates as economic theory suggests consumption is inversely related to interest rates. In theory, an increase in interest rates should deter people from consumption and borrowing to fund consumption as the opportunity costs of a loan (i...
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Question: Are economists wrong in saying that consumption depends negatively on interest rate? (5 marks)
The economists are not “wrong†in claiming consumption depends negatively based on interest rates as economic theory suggests consumption is inversely related to interest rates. In theory, an increase in interest rates should deter people from consumption and borrowing to fund consumption as the opportunity costs of a loan (i...
Essay fragment
General points of the essay
Controlling the Economy with Interest Rates Does it Accomplish the Task on the Consumer Side?
Economic Theory Suggests that Markets are Efficient and Security Prices are Determined on the Basis of Fundamental Value
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