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What's more useful for the economy of the country: when people are shopping like crazy or invest money? |
i'm totally dumb on such topic so i expect explanations,not the shouting "stupid question". It actually takes a little of both. When people are buying that increases demand for products and services. More people are making more money. In order to meet this demand business must invest in capacity, weather it be a new factory or a new resteraunt. To do so they will generally borrow money. For the banks to have the money to loan they need people and business to deposit money, in other words invest! To persuade us to make deposits they offer higher interest. If this seems circular it is. If people are making more money they have more to save but will only do so when the return seems better than getting that new dress or set of golf clubs. I believe it goes both ways: |
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