ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Higher interest rates make loans more expensive for both businesses and consumers, and everyone ends up spending more on interest payments. The fed funds rate impacts how much commercial banks charge each other for short-term loans.

Detailed explanation-2: -Higher interest rates increase the cost of borrowing, reduce disposable income and therefore limit the growth in consumer spending. Higher interest rates tend to reduce inflationary pressures and cause an appreciation in the exchange rate.

Detailed explanation-3: -Explanation: When the interest rate in the market rises, more individuals or companies start looking for investments to get higher returns. This is because a higher interest rate will certainly provide a higher return on investment.

Detailed explanation-4: -The downside of higher interest rates is that they tend to hurt most other types of investments, particularly stocks. But slower economic growth usually leads to challenging market conditions. Interest rate changes can affect your debt as well. 21-Sept-2022