00:01
So here we are talking about lowering interest rates, right, which we would characterize as monetary policy.
00:08
So we are lowering rates.
00:10
Let's go through each of these and see which is most compelling.
00:15
So one, more imports.
00:19
This is incorrect, right? and this one is actually a little tricky because there's a bit of a chain here, right? when we have interest rates down, this tends to lead to a depreciation of the currency, right? when your country is offering a lower interest rate, fewer people are going to want to buy your currency because it pays off less.
00:45
This means that imports are expensive.
00:48
And when imports are expensive because your currency is not worth much, people are not going to buy it.
00:54
So this one is wrong.
00:57
Savings up.
01:00
This is wrong, right? when r down, this means that savings pay less, right? the interest rate is the return to savings.
01:11
So if savings are paying less, people are not going to choose to save more.
01:16
Three, unemployment and inflation are going to go up...