Answer to Question #56210 in Finance for Ying

Question

Description of a country if they print money will affect interest rates？
（And measures the inflation and deflation）

Answer 1

If a government prints money faster than the growth of real output it reduces the value of money and this invariably causes inflation. Governments often resort to printing money when they cannot finance their borrowing by selling bonds. This hyperinflation can be extremely damaging to an economy.

The creation of paper money by the Fed can push interest rates lower. Consequently, the cost of mortgages, car loans and other consumer credit also can fall. Money printing can also push up the stock market.
So, the printing of new money will decrease interest rates in the country.