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03-19-2008, 08:28 PM
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| Economics question...please help?
Why would inflation increase, if interest rates are cut?
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03-19-2008, 08:28 PM
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there is more disposable income in the economy therefore more money being spent. if you want to cut inflation you have to reduce the amount of money being moved around the economy.
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03-19-2008, 08:29 PM
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If interest rates are cut that means more people have more cash in their pockets, more cash in their pockets means that they will be able to pay higher prices. Items prices therefore increase!
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