3 ms·

Yeah you've completely ignored the inelastic portion of the sentence... There are these products that no matter how dearer $1 gets - you will absolutely buy th

Yeah you've completely ignored the inelastic portion of the sentence... There are these products that no matter how dearer $1 gets - you will absolutely buy them. You can't destroy demand on these products like what you're describing. You and your family could literally die without some of these products. And no raising of interest is going to help that.

mitthrowaway2 4y ago
Yes; you will buy them with the last one dollar in your pocket, instead of the last two dollars. The price can vary fluidly even if the quantity consumed does not. A century ago, a loaf of bread cost only a nickel and that's not because people ate less or because food supply was more plentiful or demand more elastic. But even setting that aside, interest rates operate on aggregate demand which is averaged across all goods, just like inflation is.