Impacts of Interest Rates on Short-term decisions to be made by Wal-Mart and Target Firms (Essay Sample)

TOPIC: ASSESSMENT OF ECONOMIC CLIMATE
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Impacts of Interest Rates on Short-term decisions to be made by Wal-Mart and Target Firms
The aspect of interest rate is usually brought about by the risk associated with the probability that a lender may fail to repay a loan borrowed (Carolin, 2019). Therefore, lenders impose a reward on loans as a strategy of compensation against the risk. Interest rates allow borrowers to spend money urgently/immediately instead of having to wait and save money to purchase products (Carolin, 2019). Low interest rates encourage spending as consumers may borrow loans and make purchases whereas high interest rates discourage spending as consumers tend to hold back from borrowing loans. Similarly, interest rates influence the investors’ decisions regarding investment plans. Investors tend to select the options that offer higher return rates and do away with those associated with low return rates (Carolin, 2019). Changes in interest rates directly influence the consumers’ spending and the profits made by Wal-Mart, therefore, the firm sets average prices that are affordable to consumers and also bring about profits.