Interest Rates in Economics It has been an experience that proficiency in mathematics, both in numerical manipulations and in understanding its conceptual foundations, improves a person's ability to manage the more ambiguous and qualitative relationships that dominate everyday financial decision making (Greenspan). This quote is from Allan Greenspan, the chairman of the Federal Reserve Board who was probably the most powerful man in the world. Greenspan was also extremely financially intelligent. Being financially informed is essential to surviving in today's financial world. Even more important is to educate yourself about interest rates because they play a huge role in our economy. I believe higher interest rates will improve the economy. Higher interest rates make it harder to borrow money, and in effect the value of the dollar rises and inflation falls. Interest rates are the cost of borrowing money, expressed as a percentage, usually over a one-year period. Just a few items that have interest rates are mortgages, cars, and credit cards. An interest rate is the amount of money a borrower must pay to the lender in addition to the amount borrowed. Over the past decade, interest rates have fluctuated up and down like a roller coaster. According to a report from the Federal Reserve Board, interest rates have not remained stable for more than a year over the past decade. In 1990, interest rates were at an all-time high, around 8%, nearly double what they are today. From 1991 to 1994 rates fell to a decidedly low 3%. From the end of 1994 until the beginning of the new millennium, interest rates rose to 5-6% and remained between 5 and 6%. By... middle of paper... tedBaker, Jeremy. Telephone interview. November 14, 2005. Board of Governors of the Federal Reserve System. Selected interest rates. November 10, 2005. November 14, 2005 .CNN Money. November 15, 2005. November 15, 2005. Easterling, ed. Unexpected Returns: Understanding Secular Stock Market Returns. Cypress House, 2005.Effect of economic data on rates. Graphic. Why do mortgage rates change? By Meyers Internet. 2005.FunAdvice.com. Ed. Merriman Capital Management. November 21, 2005. November 21, 2005. .Greenspan, Allan. Interview. Clever quote.Krugman, Paul. "Bernanke and the Bubble." NY Times October 28, 2005. Friday Sec. A: November 21.15, 2005. Maybury, Richard. Early warning report from the United States and the world. November 2005. November 14, 2005 .Moeckl, Matt. Telephone interview. November 14, 2005. Why interest rates change. December 1, 2005. December 1. 2005. .