Buy custom Interest Rates in the Economy
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| Topic: |
Business
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| Number of pages / Number of words: |
6 / 1515 |
Essay's paper body
However, the rate the Board does set is very close to the interest rate, or the actual rate consumers pay (Merriman 1).
There are three main reasons why interest rates change. The first reason is supply and demand. If the demand for borrowing money is higher than the lender has available, the rates will increase...
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This would happen if the interest rates were raised during a low time in the economy. People then have no choice but to still borrow money. However, if there is not a demand for borrowing money, then the lenders will be competitive, lower their rates, and try to draw in anyone they can get.
Inflation is another factor in the fluctuating interest rates...
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