simtiaz Posted April 17, 2016 Report Share Posted April 17, 2016 Quick question So my econ book says “If there is unanticipated inflation or inflation greater than that anticipated by banks and incorporated into the rate charged to borrowers, then the real interest rate will be reduced and households induced to spend on durable goods” But it doesn’t explain why JUST durable goods Can someone help me with this? xx thanks! Reply Link to post Share on other sites More sharing options...
zochens Posted April 20, 2016 Report Share Posted April 20, 2016 Hi! You know, durable goods are such as art, cars, books and generally everything that cannot get used up very quickly. Non-durable goods are such as toilet paper, foood and generally just an opposite thing to durable goods. This is just an emphasis, that the consumers would rather spend their money, instead of saving them. Probably because they have already purchased all non-durable goods they needed for a given let's say - month, and now if it is not profitable for them to save money (because intrest rates were decreased), they are spending it. I am not a teacher, but I hope that it sounds clear and I helped you somehow! Reply Link to post Share on other sites More sharing options...
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