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From course:

Economics A Level (DONEEEEEEE)

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Question:

Why does the MPC need to look 2 Years into the Future for Interest Rates? [Use % Rates Falling]

Author: eric_galvao



Answer:

-Reducing Interest Rates won’t cause an AD Surge -Firms will Plan Investment Projects Carefully - so Months or Years until they Spend -House Buyers need Time, as People need to Look Around for a Home, and actually Finalise the Purchase. Fixed Rate Mortgages won’t feel anything until the Fixed Rate Period ends


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