S E35: Connecting Interest Rates & Output
Think Like An Economist
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The Interest Rate You Get When You Take Out a Personal Loan
Interest rate on personal loans tends to be a bit higher because the bank can't repossess you if you miss some payments. This is also why pay day lending shops charge really high interest rates, often in the double digits. But that risk premiumis not just about your personal risk; it's also going to reflect what's going on in the economy and sentiments in financial markets. And as we saw before, the interest rate you pay affexts output.
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