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Prices go up if demand exceeds supply. Raising rates cools the economy, reducing demand, thereby reducing prices. That’s the idea anyway…
by balderdash 4y ago
Prices go up if demand exceeds supply. Raising rates cools the economy, reducing demand, thereby reducing prices. That’s the idea anyway…
- beebmam 4y agoPrice elasticity has a lot to do with whether your statement holds in a given circumstance.
- stephen_g 4y agoYes, that's the theory. And it's honestly ridiculous to believe that such a simple, static model could work in the actual, real-world economy, which is a complex dynamic system... (The simplistic theories also assume everything is priced in the way fungible commodities are, which is not how much of the world works)