The National Economy

Question 1

What do interest rates determine?

Answer 1

the amount of interest payments that savers will get on their deposit

Question 2

What does an increase in interest rates lead to?

Answer 2

increase in saving as it makes it look more attractive

Question 3

What does a cut in interest rates lead to?

Answer 3

decrease in the amount of people saving as there is a reduce of rewards

Question 4

What else is an incentive to increase investing in capital

Answer 4

raise in demand for the product

Question 5

What is a reason borrowing won’t increase, regardless of a cut in interest rates?

Answer 5

banks won’t loan to firms