Low interest rates helps mitigates the exponential increase which compounding returns yield. Hence, low interest rates reduces the amount of interest on deposits or loans.
- Since compounding returns involves the reinvestment of both initial capital and interest over time.
- This often leads interest maximization often leading higher return on deposit. Hence, to curtail the effects excessive high return on deposit, the interest rate has to be reduced.
Learn more : https://brainly.com/question/25751039
