The following are advantages of High interest Rate
- Saving increases:- The first advantage of high interest rate is that saving ration in the economy increases, The high interest rate offered by the Bank encourage people to save and invest in risk free investment to earn profit.
- Investment increase in long run;- we know that saving leads to investment, if you will have some saving you will appropriate investment , therefore current saving of people due to high rate of investment will increase future investment in business.
- Reduced Demand for Goods :- The third advantage is that it reduces the demand for goods in the market because people prefer to deposit money instead expenditure. This situation help to meet the demand and supply Gap
- Reduced Inflation:- off course one of the main advantage of high interest rate is to reduce inflation in the economy . it is off course due to decrease in the demand of good in the market.
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