Disadvantages of High
Interest Rate
The following are major
disadvantages of high interest Rate.
1. Investment in New project Reduced:- Due to
availability of risk free investment for investment. The investor are
reluctant to invest in new project or expansion of current project.
2. Job Creation slow down:- because the
investment in new project is reduced therefore the new jobs are not
created . This would result in high rate of unemployment.
3. Shortage of Supplies:- because no new
investment made therefore in long run it may create demand and supply
Gap. so one can say that in short term it will control the inflation and
long run it will create inflationary pressure.
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