This revision video looks at some of the synoptic effects of a period of higher interest rates.

Central banks in many countries including the UK have been raising their main policy interest rates.This is a tightening of monetary policy. It is mainly designed to bring about a period of disinflation by slowing down the growth of aggregate demand. But higher interest rates have both micro and macroeconomic effects.They affect some consumers, firms and industries more than others. Some gain, others lose out when interest rates are rising.

VIDEO TIMESTAMPS
00:00 - Introduction and overview of the micro and macro consequences of rising interest rates.
00:32 - Interest rate changes since the 2008-2009 global financial crisis.
01:05 - Micro effects on individuals and households, including borrowing costs and savings.
01:44 - Negative effects on businesses, such as increased debt service costs and reduced investment.
02:19 - Link between households and businesses, impact on consumer spending and property prices.
03:21 - Appreciation of the exchange rate and its effects on imports and supply chain industries.
04:26 - Positive macro effects, including reduction of inflation and increased savings in the banking system.
05:30 - Negative macro effects, such as impact on export industries, risk of recession, and government finances.
08:06 - Advice on using supply and demand and cost and revenue curve analysis in microeconomic analysis.

VIDEO SUMMARY
In this synoptic economics video, the focus is on the micro and macro consequences of rising interest rates. The video highlights the recent significant interest rate changes since the global financial crisis and discusses the effects on individuals, households, businesses, and the wider economy. Micro effects include increased borrowing costs for individuals and households with loans, while savers may benefit from higher interest rates. Businesses with debt may face higher debt service costs and reduced investment. Rising interest rates can also impact consumer spending, property prices, and supply chain industries. At the macro level, higher interest rates can help control inflation, increase savings in the banking system, but also negatively affect export industries and pose the risk of recession.

KEY TERMS IN THE VIDEO
rising interest rates, micro and macro consequences, central banks, inflation, borrowing costs, savings, debt service costs, investment, consumer spending, property prices, exchange rate, export industries, recession, government finances, supply and demand analysis, cost and revenue curve analysis, macroeconomic effects.

#interestrates #ukeconomy #edexceleconomics

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