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You are here: Home / Potpourri / Economics 101: Interest Rate Effect

Economics 101: Interest Rate Effect

Economics 101: Interest Rate Effect

[This is part of the series: The Complete Guide To Economics 101.]

What is the interest rate effect?

The Interest Rate Effect is the impact that a decreasing price level will have on investments due to changing interest rates.

In short, the idea goes that as price levels fall everyone has more money.

This increase in money will lead to lower interest rates, and lower interest rates lead to more business investment.

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Filed Under: PotpourriTagged With: #Economics101

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