Economics

Topic Videos

Negative Interest Rates Short Answers

Level:: AS, A-Level, IB, BTEC National

Board:: AQA, Edexcel, OCR, IB, Eduqas, WJEC

Last updated 9 Oct 2019

In some Euro Zone countries, both the nominal and real interest rate has become negative. Using a numerical example, distinguish between nominal and real interest rates.Explain how negative interest rates might impact on two macroeconomic objectives. Here is a short video providing an answer to this question.

Gillian Tett: There is a downside to negative interest rates — and it's all psychological. People feel so anxious when this happens that the fear ends up undermining the benefits of cheaper loans. https://t.co/cBGDjc2NU1
— Financial Times (@FinancialTimes) October 9, 2019