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This paper presents an overview of how interest rates function, how the Federal Reserve manipulates interest rates as a means of exerting control of the economy and what factors affect interest rates. The paper also discusses Federal Reserve policy regarding interest rates in recent years and concludes that falling interest rates are good for both the economy and the individual.
From the Paper:"In recent months, we have heard a great deal about the importance of interest rates in manipulating our sagging economy. We know that interest rates affect what we pay on our mortgages, credit cards and educational loans. It also impacts how much money we make on the money we deposit with a bank. We have also learned about the effect of interest rates in the stock market: higher interest rates discourage businesses from borrowing money, expanding and hiring new workers, which causes their stock to either stagnate or fall in value. Interest rates have been lowered by the Federal Reserve eleven times in the past year to a four-decade low of 1.75% in an effort to salvage our hurting economy."
Cite this Essay:
Interest Rates (2006, February 22) Retrieved January 28, 2022, from https://www.academon.com/essay/interest-rates-64017/
"Interest Rates" 22 February 2006. Web. 28 January. 2022. <https://www.academon.com/essay/interest-rates-64017/>