The federal reserve can effect the money supply through interest rates. Would you be more likely to borrow money if you were going to pay higher or lower interest rates? How can this effect the amount of loans banks will issue?

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Litzy Harper

26 July, 20:49

The federal reserve can effect the money supply through interest rates. Would you be more likely to borrow money if you were going to pay higher or lower interest rates? How can this effect the amount of loans banks will issue?

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Alicia · Answer 1

Lower interest rates.

Explanation:

Banks make it so if you are to get a loan of a large amount of money you are required to play a higher amount of interest rates. They do this for the risk in handing out loans. The higher it is the think the less it'll take for people to pay them back. This affects banks loans because lots of people don't want to pay such high interest rates for a loan knowing it'll take them awhile to pay back the money.