From the course: Economics for Everyone: Understanding a Recession
Join today to access over 22,600 courses taught by industry experts or purchase this course individually.
Interest rates and bonds
From the course: Economics for Everyone: Understanding a Recession
Interest rates and bonds
- Interest rates usually drop in a recession, and it's not accidental. It's completely intentional. The truth is most interest rates are driven by or impacted by what central banks do, and central banks can cut underlying interest rates, and they often do when the economy slows. It's a way to help stimulate growth because, when you cut interest rates, the cost of money gets cheaper, and that incentivizes consumers to buy new cars or other durable goods they might finance, and it can boost the housing market. Plus, it incentivizes businesses to make investments that otherwise they might not consider because it might not be worth it, but lower interest rates increase the incentive to buy that new equipment, build that new structure, or invest in that new R&D. Of course, when central banks cut the rates, this has an impact on things like bonds. So bonds have two parts. There's the price of the bond, what you paid for it,…
Practice while you learn with exercise files
Download the files the instructor uses to teach the course. Follow along and learn by watching, listening and practicing.
Download courses and learn on the go
Watch courses on your mobile device without an internet connection. Download courses using your iOS or Android LinkedIn Learning app.