ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -When interest rates decline, savings account rates also drop. When interest rates rise, savings account rates are bid up. Generally speaking, central banks and governments support low-interest rate environments. This artificially pushes down the rates earned everywhere else in the economy.

Detailed explanation-2: -Currently, the national average savings account interest rate is 0.22%, according to Bankrate.com. But that’s an average. Different institutions offer their own interest rates, with rates that start at 0.01%.

Detailed explanation-3: -When interest rates are rising, both businesses and consumers will cut back on spending. This will cause earnings to fall and stock prices to drop. On the other hand, when interest rates have fallen significantly, consumers and businesses will increase spending, causing stock prices to rise.

Detailed explanation-4: -Interest rates can determine how much money lenders and investors are willing to save and invest. Increased demand for loanable funds pushes interest rates up, while an increased supply of loanable funds pushes rates lower.