Factors like inflation or a continuous increase in the standard of living operate in the opposite direction to the incoming interest rate.

Question

Quizplus · Accepted Answer

Inflation and a continuous increase in the standard of living lead to an increase in the demand for goods and services, which in turn leads to an increase in prices. This increase in prices reduces the purchasing power of money, which makes it more expensive to borrow money. As a result, interest rates tend to increase in response to inflation and a rising standard of living.

Factors Like Inflation or a Continuous Increase in the Standard