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Low-Paid Worker Wages and Economic Impact

Question

Analyse how a cut in the interest rate could reduce poverty.

Category:

Interest Rates

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Preview Answer

I. 🍃Introduction
- Brief overview of the coherent analysis

II. Cost of borrowing will fall / reward from saving will decline
- Explanation of how this will increase borrowing
- Discussion of the potential increase in demand for loans

III. Consumer spending will increase
- Explanation of how increased borrowing will lead to increased consumer spending
- Discussion of the potential impact on firms investing more

IV. Employment may increase
- Explanation of how increased output may lead to more job opportunities
- Discussion of the potential impact on incomes rising

V. Reduction in poverty
- Explanation of how the poor who have borrowed in the past may have more money to spend on basic necessities
- Discussion of the potential impact on education and skills improvement

VI. Housing may be cheaper
- Explanation of how cheaper housing may make shelter more accessible
- Discussion of the potential impact on small business start-ups

VII. Cheaper for government to borrow
- Explanation of how cheaper borrowing may enable the government to spend more on education and healthcare

VIII. 👉Conclusion
- Summary of the potential benefits of increased borrowing and reduced cost of borrowing.

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