The Feds have kept interest rates low in an effort to stimulate econom

QUESTION

The Feds have kept interest rates low in an effort to stimulate economic growth. How does this affect a companys use of long-term debt? How does this affect “you” as a consumer?
This reduces the cost of debt to a borrower and encourages him to borrow to make investments that will stimulate demand and increase economic activity (gross domestic product). This makes a company more likely to use debt and less likely to use equity as a source of funding. It affects the consumer in that they have a lower cost to borrow to finance big ticket items such as homes and cars. So it

helps the borrower and stimulates the economy because it encourages consumer spending. The other side of the coin is that savers get less interest so people who are depending on their investments (such as retirees) to support them find it more difficult to get by.

ANSWER:

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