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- Lesson 12: Interest, Credit,
- Identify what happens to interest
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Card 75 / 100: Identify what happens to interest rates when a community saves more in general, and generalize the signal that this sends to entrepreneurs.
Answer:
Interest rates tend to go down when people save more. This effectively signals entrepreneurs that they should borrow and invest more, in longer-term projects. Sample Partial Credit Answer Interest rates go down.
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Dr.Robert MurphyAssociated Scholar
Mises Institute
USA
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Attribution:
Dr. Robert P. Murphy, Lessons for the Young Economist. (Mises Institute), http://mises.org/document/6215/Lessons-for-the-Young-Economist (Accessed 04 April, 2014). License: Creative Commons BY
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