Questions tagged [interest]

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interest rate risk vs duration risk?

Is there a difference between interest rate risk vs duration risk? I feel as though I have heard them used interchangeably but I don't know if there is any distinguishing factor between the two.
jippyjoe4's user avatar
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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 ...
SRed's user avatar
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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 ...
DrShellyCooper's user avatar
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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-...
Pete Ferguson's user avatar
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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 ...
StochasticProcess's user avatar
2 votes
3 answers

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 ...
Hi There's user avatar
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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 ...
Antony Mark's user avatar
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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 ...
aquaplane's user avatar
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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 ...
H2ONaCl's user avatar
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