Typically the fed would lower interest rates to increase consumption and demand, thus lowering unemployment. However in this scenario the fed increases short term interest and it lowers the unemployment rate over 1% in a year. how is this possible?
More From 911 loan modification
- Any Mortgage Banks You Could Suggest For Lower Interest Rates?
- Why Do Banks Prefer Lower Interest Rates If Their Spread Stays The Same?
- Can Anyone Explain Why Gold Has Dropped While The Federal Reserve Continues To Lower Interest Rates?
911 loan modification Recommends
- Today’s Mortgage Interest Rates And The Health Of The Economy (Economy Pulse)
- How the Fed Could Save the Economy and Destroy the Currency (Economy Pulse)
GD Star Rating
loading...
loading...
Related Posts:
Tags: Consumption, Could, Increasing, Interest, Interest Rates, Lower, Rates, Term Interest, Unemployment, Unemployment Rate
3 Responses to “How Could The Fed Increasing Interest Rates Lower Unemployment?”
Leave a Reply
Filled Under: Mortgage Loan Modification
December 20th, 2009 at 3:03 am
An increase in interest rates means that the USD is now able to earn foreign investors a better income. Therefore the USD will go up. This means that imported goods are now cheaper to American consumers. The Law of Demand states that as price decreases the quantity demanded increases. This means more revenue is gained by producers who will (according to circular flow) increase the total paid to workers; thereby decreasing unemployment.
It could also be that the Fed has worked out that due to time lapse the economy is where they want it to be in terms of unemployment.
loading...
December 20th, 2009 at 3:03 am
wrong. by increasing interest rates un employment increases. this is how; all industry is run on bank finance. By increase in rate of interest, cost of production goes up. hence prices also must go up. with increase in prices, imported good becomes cheaper. so the local industry becomes un productive or unsaleable viz a viz to imported goods. So industry tends to close down and unemployment increases
loading...
December 20th, 2009 at 3:53 am
Banks always have hypothetical answers.
loading...