Conscious manipulation of the interest rate causes it to become a less effective tool in allocating resources among time periods.

Question

Quizplus · Accepted Answer

When the interest rate is consciously manipulated, it may no longer accurately reflect market conditions and may lead to misallocation of resources over time. Additionally, it may lead to inflation or deflation depending on how the central bank manipulates it.

Conscious Manipulation of the Interest Rate Causes It to Become