Question.2505 - As a tool to combat inflation (which we will learn about in an upcoming week), the Federal Reserve has recently been increasing interest rates. How has this impacted the market for loanable funds that both borrowers and savers participate in? [6 points] The FRED database publishes some two dozen measures of interest rates, including interest rates on credit cards, automobile loans, personal loans, mortgage loans, and more. You can find these at the FRED websiteLinks to an external site.. Visit the site, select a measure that of interest to you, and report it in our discussion. Either download the graph that you are viewing to place it into your discussion or share a direct link to the graph. [5 points] Discuss the graph your have placed into your discussion. Give the reader some perspective on this interest rate over time. Consider these questions: What is the rate today? What is the highest rate you observed over the time period in the graph? When was it? What is the lowest rate? When was it? Did the rate change quickly or slowly over time? [5 points] Has the change in interest rates changed people's behaviors? You can discuss your personal observations (if you wish to share) and/or discuss how theory predicts people respond to changes in interest rates.
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Option 2: Market for loanable funds 1. 2. The rate today is 0.68. The highest rate observed over a period of time is 0.68, and it was observed in May 2024. The lowest rate observed over a period of time is 0.06, and it was observed in May 2021. The rate was changing slowly over time. 3. Interest rate changes may impact people's savings and consumption. The returns on savings accounts and other investment interest rates will increase with interest rates. There is less chance of borrowing money or going for a loan if interest rates are very high. On the other hand, when interest rates are extremely low, people are more likely to go for loans or borrow large sums of money to finance things like buying homes and vehicles and for educational and marriage purposes. References Federal Deposit Insurance Corporation. (n.d.). Money Market National Deposit Rates. FRED, Federal Reserve Bank of St. Louis. https://fred.stlouisfed.org/series/MMNDR#More Articles From Economics
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