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Impact of Rising Interest Rates on Firms

Question

Analyse how firms may be affected by a rise in the rate of interest.

Category:

Macroeconomic Factors and Policies

Frequently asked question

Preview Answer

I. 🍃Introduction
- Brief explanation of the topic

II. Impact on firms
- Increase in cost of borrowing
- Discouragement of investment
- Reduction in growth
- Possible increase in prices
- Decision to save more
- Increase in return
- Rise in opportunity cost of investment
- Decrease in profits

III. Impact on consumers
- Discouragement of borrowing
- Encouragement of saving
- Decrease in demand for consumer goods
- Reduction in firms' revenue

IV. 👉Conclusion
- Summary of the main points
- Final thoughts on the topic

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