ECO100Y5 Chapter Notes - Chapter 19: Canadian Dollar, Nominal Interest Rate, Intermediate Good

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10 Apr 2018
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In general, interest rate is the cost of borrowing money for a specified amount of time. Typically, this is expressed in percentage points per year, so if interest rate were 10%, someone would have to pay 10 cents for each dollar they borrowed for 1 year. The interest rate can refer to different rates, since different types of customers are offered different rates depending on their level of wage. Two main interest rates economists talk about: the prime interest rate: rate that banks charge their best customers, the bank rate: the rate the bank of canada charges to commercial banks (rbc, cibc, etc. ) Credit markets link available funds from households and businesses to those households and businesses looking to borrow funds. Banks acts as an intermediary in these markets ensuring that they function properly. In 2008, credit markets were in trouble as many financial institutions in the us and europe collapsed.

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