Interest Rates

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6 Terms

1
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Define Interest Rates

the amount a lender charges an individual or business to borrow money

2
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Describe Interest Rates

the Reserve Bank of Australia (RBA) adjusts interest rates to influence economic growth and inflation

3
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Explain High Interest Rates

  • set by the RBA to control inflation

  • increased borrowing costs for business and consumers

4
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Impact of High Interest Rates on Businesses

  • higher loan costs

  • reduced investments

  • lower demand

5
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Explain Low Interest Rates

  • consumers have more money for discretionary spending

  • reduced loan repayments

6
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Impact of Low Interest Rates on Businesses

  • lower borrowing costs

  • increases investment

  • higher sales

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