Although low interest rate can encourage firm to take on more debt to produce more it does
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Although low interest rate can encourage firm to take on more debt to produce more it does not always mean that low interest rate is used to expand economically. Low interest rate can be used when the economy is facing deflation. One can say that coming out of deflation is progressing and expanding but it can also be seen as coming back to our normal state of the economy. This makes low interest rate in a deflating economy far from expanding to new level of production. Having low interest rate treat deflation is one situation where the central bank is not looking to expand.
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