If the government keeps real interest rates low (either by raising inflation or by decreeing low interest

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“If the government keeps real interest rates low (either by raising inflation or by decreeing low interest rates), then this encourages extra borrowing by businesses, which leads to more investment purchases, a larger stock of capital equipment, and higher productivity. Therefore, an interest rate ceiling is a good idea.” What’s wrong with this argument?
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Modern Principles of Economics

ISBN: 978-1429278393

3rd edition

Authors: Tyler Cowen, Alex Tabarrok

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