CTP 09 - Federal Reserve chose to lower interest rate to...

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Tat Sang Lao ECON 202 – David Bell June 6, 2010 CTP 09 Low Interest Rate Since the recession happened, the interest rate was kept in a low level to help the economy go out from the bottom. The Federal Reserve set the low interest rate is good for nowadays business condition; however, it is not good news for some people such as savers. People on fixed incomes receive low interest on their savings will have some effect to the economy. For savers, low interest rate reduces their fixed income so that savers may also reduce their consumption. That is no good because less consumption cause a sluggish economy. For investors, keeping money in the bank means lose money for investors when in low interest rate, so they will do some investments rather than keep the money in the saving account. That’s why
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Unformatted text preview: Federal Reserve chose to lower interest rate to save the economy. Clothing price decline was caused by weak consumption. Clothing is not necessary good, so people will chose to save those spending when their income decline. Also, people will spend more in clothing if their income increases. So the clothing price will increase when the economy is going strong. I think the gasoline price decline in the summer is because of the supply and demand. According to the article, the crude oil prices are down nearly 20 percent since April. That gives energy companies a room to reduce the gasoline price for the consumers. In addition, the relative weak demand is another reason. Since the crazy gas price before, people now know how to save gas. Therefore, the gas price may drop this summer....
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This note was uploaded on 04/17/2011 for the course ECON 202 taught by Professor Kotlove during the Spring '11 term at Edmonds Community College.

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CTP 09 - Federal Reserve chose to lower interest rate to...

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