part 4, 4

Question 1

What are the consequences of a lower interest rate?

Answer 1

• higher loans (fr. households and businesses)
• higher household expenditure
• higher company investments
• higher gdp

Question 2

What are the consequences of a higher interest rate?

Answer 2

• lower loans (fr. households and businesses)
• lower household expenditure
• lower company investments
• lower gdp

Question 3

Entrepreneurs have convenience to demand a loan and invest money in project x if?

Answer 3

• ebit (earning before interest and taxes) is higher than the cost of investments, interests they have today.
• taxes are not erode majority part of debt (earning before taxes)