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    Interest Rates

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    Suppose a new process was developed that could be used to make oil out of seawater. The equipment required is quite expensive, but it would, in time, lead to very low prices for gasoline, electricity and other types of energy. What effect would this have on interest rates?

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    Solution Preview

    In the long run, interest rates would likely increase. The Fed uses interest rates as a way of controlling economic inflation. If the economy gets too hot and expands too ...

    Solution Summary

    The expert examines the interest rates of purchasing expensive new equipment.