Explain the link between the rate of interest and inflation, Microeconomics

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Explain the link between the rate of interest and inflation.

Interest can be explained as the price of money - more expensive money will lead to few loans, higher saving and as lower investment and consumption. This will have a dampening effect on AD and therefore inflation.

 


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Explain the link between the rate of interest and inflation, Explain the li...

Explain the link between the rate of interest and inflation. Interest can be explained as the price of money - more expensive money will lead to few loans, higher saving and as

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