Comments on: How will the interest rate and planned investment spending change as the following events occur? http://www.moneyanecdotes.co.uk/investing/how-will-the-interest-rate-and-planned-investment-spending-change-as-the-following-events-occur/ Money Anecdotes Finance Blog Wed, 28 Jan 2009 01:11:52 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Nathan http://www.moneyanecdotes.co.uk/investing/how-will-the-interest-rate-and-planned-investment-spending-change-as-the-following-events-occur/comment-page-1/#comment-168 Nathan Mon, 24 Nov 2008 13:56:17 +0000 http://www.moneyanecdotes.co.uk/investing/how-will-the-interest-rate-and-planned-investment-spending-change-as-the-following-events-occur/#comment-168 a. This will decrease the interest rate (cost of money) becasue the supply of money has increased. Lower rates will mean more spending, looser credit, and more planned investments (like houses and cars). c. Inclined to say this will increase rates and decrease investment spending for the aforementioned reasons. Banks lend against savings, and when savings deposits are depleted, they will not be able to lend as much (although some will recycle right back into savings but probably not at a 1 to 1 ratio). Also, increased spending in masse by baby boomers will create inflationary pressure with also leads to higher interest rates, reducing planned investment. a. This will decrease the interest rate (cost of money) becasue the supply of money has increased. Lower rates will mean more spending, looser credit, and more planned investments (like houses and cars).

c. Inclined to say this will increase rates and decrease investment spending for the aforementioned reasons. Banks lend against savings, and when savings deposits are depleted, they will not be able to lend as much (although some will recycle right back into savings but probably not at a 1 to 1 ratio). Also, increased spending in masse by baby boomers will create inflationary pressure with also leads to higher interest rates, reducing planned investment.

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