Inflation Flashcards
1
Q
What is the target rate?
A
2%
2
Q
What is the objective of increasing the interest rate?
A
Reduce the number of people who buy, businesses will then reduce prices and inflation will come down.
3
Q
How do lenders benefit from inflation?
A
Interest payment will go up, resulting in lenders getting more return due to the increase in the interest rate.
4
Q
How is cost of living and standard of living affected by inflation?
A
Individuals who have loans and mortgages will pay more if interest rates rise, meaning that their cost of living will go up and their standard of living will go down.
