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16 Мар / 2020
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Inflation and interest prices tend to be connected and often referenced in macroeconomics. Inflation is the price from which costs for products and solutions increase. The interest rate, or the amount charged by a lender to a borrower, is based on the federal funds rate that is determined by the Federal Reserve (sometimes called «the Fed») in the United States.

The Fed has at its disposal a powerful tool that it uses to influence the rate of inflation by setting the target for the federal funds rate. This device allows the Fed to enhance or contract the amount of money supply as required to produce target employment prices, stable rates, and stable growth that is economic.

Key Takeaways

  • There clearly was an inverse correlation between rates of interest as well as the rate of inflation.
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