Gross Domestic Product (GDP) and Interest Rates

Business & Finance
Tutor: None Selected Time limit: 1 Day

  • The Federal Reserve Board has kept the federal rate to a nominal rate in recent years. Explain the rationale for this behavior, indicating the effectiveness on financial markets. 
May 4th, 2015

Federal Reserve Board has kept the federal rate to a nominal rate in recent years  so that businesses can obtain low cost loans from financial institutions.  The businesses in turn use these loans to raise their production by building more facilities thereby hiring more people. As a result, people have more spreadable income for buying consumer items.  This way, the unemployment drops but the GDP increases.

May 4th, 2015

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