Unexpected lower interest rates redistribute income from

Question

Quizplus · Accepted Answer

Lower interest rates make it cheaper for borrowers to borrow money, which means they have more money to spend. This increase in spending drives up demand for goods and services, which allows businesses to raise prices. However, savers and lenders earn less on their saved funds because of lower interest rates. Thus, unexpected lower interest rates redistribute income from lenders to borrowers.

Unexpected Lower Interest Rates Redistribute Income from