Low interest rates: 1.) Do not impact the supply of credit 2.) Decrease employment opportunities 3.)...
Low interest rates:
1.) Do not impact the supply of credit
2.) Decrease employment opportunities
3.) Increase the demand for lower-grade riskier bonds
4.) Increase the number of financial institutions
Homework Answers
1. Wrong: Lower interest rates enhances supply of credit as funds are available at lower cost.
2. Wrong: Cheap availability of credit supports business houses and helps them scale up their business resulting in increase in employment opportunities.
3. Correct: There is always a trade off between risk and return. One can gain more by taking more risk. Lower grade bonds are often riskier hence offer higher rate of return. In times when interest rates are low in the economy, their demand may rise.
4.Wrong: Interest rate movement is not related to the increase or decrease in the financial institutions in any way.
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Low interest rates:
1.) Do not impact the supply of credit
2.) Decrease employment opportunities
3.)...
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1.Describe the impact of rising interest rates on consumer spending. 2. When the economy is operating...
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Which of the following statements is true A Interest rates on bonds of different maturities tend...
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Impact of interest rates on bonds
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20. An increase in the Bank rate will result in A. an increase in the money...
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