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During and post recessions interests rates decline in order to increase investment spending. Thus, the initial increase in investment spending results in a much larger
During and post recessions interests rates decline in order to increase investment spending. Thus, the initial increase in investment spending results in a much larger increase in total spending known as the "multiplier effect". However, during the Great Recession of 2007-2009 when real interest rates essentially declined to zero we should have expected to notice an increase in investment spending and total spending, that was not the case. If you were the CEO of cooperation why would you be apprehensive to borrow money at a much lower interest rate to invest into your cooperation
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