Overview
Understanding the impact of savings on interest rates is essential for both individuals and the economy. When people save more, banks have more funds to lend, which can lead to lower interest rates. This dynamic encourages borrowing and spending, stimulating economic growth. Conversely, low savings ...
Key Terms
Example: I put my extra money into a savings account.
Example: The bank offers a 2% interest rate on savings accounts.
Example: When demand for loans increases, interest rates may rise.
Example: Banks lend money to individuals for home purchases.
Example: A rise in savings can lead to economic growth.
Example: The Federal Reserve adjusts interest rates to control inflation.
Related Topics
Key Concepts
savingsinterest ratessupply and demandeconomic growth