Q-1) From the e-Activity, consider your own tolerance level for risk. Then, iden
ID: 2685769 • Letter: Q
Question
Q-1) From the e-Activity, consider your own tolerance level for risk. Then, identify one method of savings or investment that fits your tolerance level and one method that does not. Q-2) From your perspective, describe the single biggest factor affecting the savings rate in the U.S. Support your answer with examples or evidence. Q-3) Describe how an increasing market interest rate affects personal financial decisions. Q-4) Imagine knowing with certainty that interest rates will not change over the next five years. Identify how this fact would change the behavior of a business of your choice.Explanation / Answer
interest rates are strongly influenced by the condition of the U.S. economy. When the economy is growing, consumers have jobs and savings to lend through banks, but they must also borrow for large items, such as homes or cars, or to finance other purchases through credit cards.
Inflationary pressures will also affect interest rates, because the rates paid on most loans are fixed in the loan contract.
International forces play an important role in influencing interest rates in the United States. To the extent that foreign investors are willing to lend money to the U.S., they supplement domestic sources of funds in the marketplace, driving interest rates down
Rate savings accounts than others, and your choice of bank is one factor that will determine the interest rate that you will get for any funds in the account. The Demand For Credit- The best savings account interest rates are always sen when the demand for credit is high, and when credit demand is low then interest rates tend to decrease as well.
Understanding the relationship between interest rates and recessions may help us to better manage our personal finances. For many years, Federal Reserve Bank (the FED) interest rate policy has been a driving force behind both the domestic and international economies. Fed interest rate policy drives the wheels of commerce because FED policy affects the availability of funds for investment at all levels. When rates are high it is more expensive to undertake new initiatives such as expanding a factory’s capacity or even buying a new car. When rates are low it is possible to trigger inflation as it costs less to “borrow and buy” at each level in the economy.
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