In order to lend more cash and increase the cash supply, the bank lowered the lending rate. This reduces the cost of loans for cars, schools and homes. They will also lower credit card rates. All this extra credit has increased consumer spending.<br>When corporate loans are affordable, companies can expand to meet consumer demand. They employ more workers, their incomes increase, so that they can shop more. Generally, this is enough to stimulate demand and drive economic growth to a healthy level of 2%-3%%.
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