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kati45 [8]
2 years ago
7

When interests rates are high it costs less money to borrow money true or false?

Business
2 answers:
vovikov84 [41]2 years ago
5 0
False.

When the rates are high you have to pay more money to borrow
olchik [2.2K]2 years ago
4 0

Answer:

false

Explanation:

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The economy begins in equilibrium at point E, representing the real interest rate r1 at which saving S1 equals desired investmen
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The new equilibrium combination will be at increases I1 to I2, S1 to S2, and r1 to r2.

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Saving or national saving of an economy is amount  of national income or gross domestic product (GPD) that is not spent by the government. Using a simple example of a closed economy, i.e. an economy with no foreign trade in terms and imports, this statement can be mathematically as follows:

Y = C + I + G .......................................... (1)

Where,

Y denotes national income (GDP), C denotes consumption, I denotes Investment, and G denotes government spending.

To get investment, equation (1) can be rewritten by making I the subject of the formula as follows:

I = Y - C - G ......................................... (2)

In economics, saving (S) is always equal to investment (I). Therefore, equation (2) can be rewritten by equating it with I as follows:

I = Y - C - G = S

I = S

Both I and S can be written as initial saving (S1) and initial Investment (I1), and we therefore have

I1 = S1 ................................................................. (3)

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