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Ep.41 Know Nothing About The Economy? This Episode's For You.

Working Hard with Grace Beverley

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The Effects of Interest Rates on Inflation

The Bank of England use interest rates to influence inflation. Inflation is the rate at which prices go up and economy. So by increasing interest rates as they have done lately, they're trying to bring inflation down. And because it's cheaper to borrow, people spend a bit more, and the prices of those things go up. The government then uses or the Bank of England then uses interest rates to actually change people's spending habits.

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