Who directly benefits from higher interest rates caused by crowding-out?

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Multiple Choice

Who directly benefits from higher interest rates caused by crowding-out?

Explanation:
When government borrowing pushes up the price of funds, the result is a higher return on saving and lending. The party that benefits directly from higher interest rates is lenders—banks, pension funds, and other savers who earn more interest on loans and on bonds or deposits they hold. While private borrowers face higher costs and the government takes on larger interest payments, the direct upside of higher rates is the increased income for those who provide funds.

When government borrowing pushes up the price of funds, the result is a higher return on saving and lending. The party that benefits directly from higher interest rates is lenders—banks, pension funds, and other savers who earn more interest on loans and on bonds or deposits they hold. While private borrowers face higher costs and the government takes on larger interest payments, the direct upside of higher rates is the increased income for those who provide funds.

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