Interest rates are closely tied to the rate of inflation.

Name: Interest rates are closely tied to the rate of inflation.
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Question

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When inflation increases, central banks may raise interest rates to help stem inflation by reducing the amount of money in circulation. Conversely, a decrease in inflation may lead to a decrease in interest rates to stimulate economic growth. Therefore, there is a close relationship between interest rates and inflation.

Interest Rates Are Closely Tied to the Rate of Inflation