Questions tagged [interest]
The interest tag has no usage guidance.
Do banks pay interest on the money they create?
A bank takes in \$10 in deposits and makes \$100 in loans, creating \$90 of new money. They pay the depositor interest on the \$10 and earn interest on the $100 loan. It looks to me like they don't ...
Taking a loan to pay another loan with the same interest
I had a discussion with family members about how taking a loan to pay another loan with the same interest is basically wasting money and they didn't agree. To make things clearer, say loan 1 is 100 ...
MMT and bond sales
Proponents of Modern Monetary Theory claim that bond sales are unnecessary and only help central banks set interest rates (which should be 0% anyway according to theory) and to provide safe interest-...
Help with calculating the taylor rule
Can anyone help me understand where these figures are coming from as my own calculations produce numbers seem to be very different, help and guidance much appreciated. For example in the first ...
Central bank use of interest to combat inflation
I continue being puzzled by the interest rate rises being used as a lever to lower inflation in the present climate. If I understand correctly, the rationale of higher interest is to dampen demand ...
Help with Macroeconomics Question: IS-LM Model [closed]
I know this is supposed to be a simple question, but I need to check the answers for it and as it was a past exam question I do not have the results for it.If anyone can help out, that would be ...
How to reconcile 1) the International Fisher Effect and 2) rising interest rates leading to currency appreciation?
The International Fisher Effect implies that a currency with a lower nominal interest rate will appreciate against another currency with a higher nominal interest rate. However, in general, a currency ...
Why does the Fed raise the FFR before reducing bond holdings?
In recent months, the Federal Reserve has been purchasing bonds at a decreasing rate. This is evident in the flattening of the slope of the total assets plot. The Fed's total assets plot... The ...