Explain the link between the rate of interest and inflation, Microeconomics

Explain the link between the rate of interest and inflation.

Interest can be explained as the price of money - more expensive money will lead to few loans, higher saving and as lower investment and consumption. This will have a dampening effect on AD and therefore inflation.

 

Posted Date: 7/11/2013 5:54:33 AM | Location : United States







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