Answer to Question #168698 in Economics for Vigilant

Question

a. “The issue of high interest rates in Ghana has been of great concern to various 

stakeholders.’ Discuss the above statement. 

b. Show how the underlisted influence the interest rates in Ghana

i. Monetary Policy Committee 

ii. Ghana Reference Rate (GRR)

Answer 1

a. Interest Rate in Ghana averaged 17.74 percent from 2002 until 2021, reaching an all time high of 27.5 percent in March of 2003 and a record low of 12.5 percent in December of 2006.

Because higher interest rates mean higher borrowing costs, people will eventually start spending less, and business will invest less. The aggregate demand will drop, which will cause inflation to fall and total output to fall.

b.

i. Monetary Policy Committee can either increase or decrease interest rate using monetary policy.

ii. Ghana Reference Rate can either increase or decrease interest rate.