Explain the importance of discount rate,

• what is discount rate
• its impact on environmental economics
• and four examples of how it impacts daily life.

Answer:

Definition of discount rate;

It is the interest rate charged to commercial banks and other financial institution borrowing from the central and federal banks.

The following are economic impacts of discount to the environmental economics;

-it improves the banks lending rate hence favorable business environment for those who lack capital to start off small businesses.

-secondly the discount rate has lead to increased investors and stock buyers from foreign countries to the banks hence improving the nations economy and the GDP.

-It has lead to reduction in the price of a commodities hence improving the living standards of the individuals and various nations hence poverty invasion.

-one is able to work out how much they can invest in business community or society.

-one is able to know the means and the of type of payment to be made whether by deposits or cash hence secured in advance.

Examples;

-it has made individuals to work hard to repay the discounts since interest accrues.

-more employment chances created by the government to reduce the chances of borrowing

-it has reduced the cost of production hence the rate of production is very high to maximize on the profits for interest payment.