Objective: Explain why interest rates change within the various financial markets, for the various securities, and the effect the changes have.

Interest rates are the cost of borrowing and the income from lending our money. Interest rates have a much larger impact on our financial well-being than we realize. They impact whether we can afford a house or a car. They even influence the number of jobs in the economy. Businesses will only borrow to grow which creates new jobs if the cost is not too high. There are many factors that affect interest rates.

Make sure to explain a specific factor that would cause interest rates to either rise or fall and the impact it would have on the supply of loanable funds. Make sure you understand the concept of the supply of loanable funds. Before you answer this question. ANSWER DETAILED SO I CAN THOROUGHLY UNDERSTAND!!!

• There are several factors that influence interest rates in the economy.
  • Explain at least one factor that would cause interest rates to change and why?
  • What is the impact on the supply of loanable funds?