Why interest rate charged is low in short term?
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In late December 2007, most economists realized that the economy was slowing. However, very few predicted an outright recession. Like most professional forecasters, the Federal Open Market Committee (FOMC) initially underestimated the severity of the recession.
In January 2008, the FOMC projected that the unemployment rate in the fourth quarter of 2010 would average 5 percent. But by the end of 2008, with the economy in the midst of a deep recession, the unemployment rate had risen to about 7.5 percent; a year later, it reached 10 percent.
In January 2008, the FOMC projected that the unemployment rate in the fourth quarter of 2010 would average 5 percent. But by the end of 2008, with the economy in the midst of a deep recession, the unemployment rate had risen to about 7.5 percent; a year later, it reached 10 percent.
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An interest rate is the amount of interest due per period, as a proportion of the amount lent, deposited or borrowed (called the principal sum). The total interest on an amount lent or borrowed depends on the principal sum, the interest rate, the compounding frequency, and the length of time over which it is lent, deposited or borrowed.
It is defined as the proportion of an amount loaned which a lender charges as interest to the borrower, normally expressed as an annual percentage.It is the rate a bank or other lender charges to borrow its money, or the rate a bank pays its savers for keeping money in an account.
It is defined as the proportion of an amount loaned which a lender charges as interest to the borrower, normally expressed as an annual percentage.It is the rate a bank or other lender charges to borrow its money, or the rate a bank pays its savers for keeping money in an account.
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