Inflation Can Reduce the True Cost of Debt, and Policymakers

question 91

Essay

Inflation can reduce the true cost of debt, and policymakers lower interest rates to encourage borrowing. Is it a good idea then to always take advantage of lower interest rates to borrow and rely on inflation to reduce the cost of debt and to increase your ability to repay the loan?

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Definitions:

Social Skills Training

A form of behavior therapy used to improve interpersonal skills through modeling, role-playing, and reinforcement techniques.

Behavioural Therapist

A professional who employs principles of behaviorism to treat psychological disorders and modify problematic behaviors through techniques such as conditioning.

Nonaggressive Ways

Methods or approaches that avoid violence or hostility in dealing with others or resolving conflicts.

Maladaptive Beliefs

Irrational or dysfunctional thought patterns that negatively influence behavior and well-being.