High Interest rates Ghana Diagrams

• What is the focus of KAA1 in the study material?

  Impacts on consumer spending and borrowing
• What are the features of the Market for Loanable Funds diagram?

  • Axes: Interest rate (Y-axis) and Quantity of loanable funds (X-axis)
  • Demand Curve: Downward sloping
  • Supply Curve: Upward sloping
• How do high interest rates affect the cost of borrowing?

  They lead to more expensive consumer credit
• What is the effect of high interest rates on consumer spending?

  It reduces consumer spending on durables
• What is a potential consequence of reduced consumer spending due to high interest rates?

  Overall reduction in aggregate demand
• Who is most impacted by high interest rates according to the study material?

  Lower- and middle-income households
• What long-term concern is associated with sustained high interest rates?

  Reduced consumer confidence and economic vibrancy
• What is the focus of KAA2 in the study material?

  National investment impact and economic growth
• What are the features of the AD-AS Model diagram?

  • Axes: Price level (Y-axis) and Real GDP (X-axis)
  • AD Curve: Downward sloping, leftward shift
  • AS Curve: Upward sloping
• How do high interest rates affect business investment?

  They increase the cost of financing
• What is a consequence of reduced business investment due to high interest rates?

  Slowed economic growth
• What impact do high interest rates have on GDP growth?

  They decelerate GDP growth
• What potential effect can high interest rates have on currency value?

  They could strengthen the currency
• Which industries are most impacted by high interest rates?

  Capital-intensive industries
• What is a broader economic context of high interest rates?

  They fight inflation and stabilize currency
• What are the implications of high interest rates on economic policy?

  • Need to balance monetary policy
  • Supportive fiscal measures required
  • Foster sustainable economic growth