interest rates

Question 1

How does interest rates change the demand for goods and services?

Answer 1

Low rates - more disposable income, consumer confidence and therefore demand for luxuries/ non-essentials.
High rates- less disposable income, lower consumer confidence and more demand for essentials rather than luxuries.

Question 2

How does interest rate change business costs?

Answer 2

Low interest rates- lower costs, lower prices, more competitive, more sales, more market share.
High interest rates- more costs, higher prices, less competitive, less sales, less market share.