What is interest rate in economics?

Interest rates are one of the most important economic concepts in macroeconomics and have a large impact on the global economy. Interest rates, which are set by central banks, refer to the cost of borrowing money. They impact how much people are willing to spend and how much businesses are willing to invest. Low-interest rates encourage people to borrow more, while high-interest rates can lead to decreased borrowing and spending. Central banks use interest rates to control inflation and manage economic growth. They also influence exchange rates, which can have a direct impact on global trade. In short, interest rates are a key factor in the health of the global economy.

Written by

Dwayne Scott, Apr, 8 2023