What are impact on borrowers and lenders?

Imagine you’re trading toys at recess, that’s kind of what lenders and borrowers do, but with money instead.

When someone is a borrower, it means they ask for help to get something now, like candy or a toy, and promise to give back more later. A lender is the person who gives them that help, they’re like the friend who shares their snack so you can have one too, but wants a little extra in return.

If prices go up (like your favorite candy gets more expensive), it makes life harder for borrowers. They might need to give back more than they promised, just like if you had to give two candies instead of one because the price went up.

But guess what? That same change helps lenders out, because they get more in return, it’s like getting a bigger snack in exchange for sharing yours!

If prices go down, things flip. Borrowers might have an easier time giving back less, while lenders might end up with a smaller reward, kind of like if your friend only gave you one candy instead of two.

So whether prices are going up or down, borrowers and lenders feel the change in different ways, just like trading toys at recess! Imagine you’re trading toys at recess, that’s kind of what lenders and borrowers do, but with money instead.

When someone is a borrower, it means they ask for help to get something now, like candy or a toy, and promise to give back more later. A lender is the person who gives them that help, they’re like the friend who shares their snack so you can have one too, but wants a little extra in return.