Sleepyjode
New member
- Nov 1, 2010
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i'm doing an essay with the title of “As a newly appointed minister in the coalition government, how would you encourage more people to save and why is saving good for the economy?” and i'm just trying to get my head around this all. first time i've entered the domain of economics
the banks are increasing the interests rates on the money they give to the banks because inflation has risen, and the banks therefore increase the amount of interest on the people who are borrowing money. this means they have more money to spend on interest rates for saving accounts. this draws in more people into saving. now more people are saving they are spending less, so the demand in products goes down in price and the business is producing less products. if this happens inflation decreases and the government interest rates lower on the banks.
is this correct and also with the economy what affect does inflation have on things like property.
the banks are increasing the interests rates on the money they give to the banks because inflation has risen, and the banks therefore increase the amount of interest on the people who are borrowing money. this means they have more money to spend on interest rates for saving accounts. this draws in more people into saving. now more people are saving they are spending less, so the demand in products goes down in price and the business is producing less products. if this happens inflation decreases and the government interest rates lower on the banks.
is this correct and also with the economy what affect does inflation have on things like property.