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Interest Rates and Economic Outcomes


Discuss whether or not a fall in interest rates will benefit an economy.


Macroeconomic Factors and Policies

Frequently asked question

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- Brief explanation of the topic
- Thesis statement

I. Reasons why a decrease in the cost of borrowing might lead to economic growth
- Increase in consumption and investment
- Decrease in savings
- Increase in total (aggregate) demand
- Reduction in unemployment
- Increase in spending on research and development
- Increase in productivity and potential growth
- Increase in net exports

II. Reasons why a decrease in the cost of borrowing might not lead to economic growth
- Inflation due to increased levels of borrowing, consumption, and demand
- Decrease in returns from savings
- Negative impact on pensioners
- Decrease in purchasing power and standards of living
- Unsustainable economic growth
- Risk of firms/individuals borrowing beyond their means

III. Impact of a decrease in the value of currency
- Decrease in the price of exports
- Increase in the price of imports
- Increase in net exports

- Summary of the main points
- Restate the thesis statement
- Final thoughts and recommendations.

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