Define the discount rate. tell who can raise the discount rate. explain how raising the discount rate leads to a reduction in the money supply.

Discount rates are used to determine today's value of money paid or received at some future time.

This calculation is used in the cost-benefit analysis in order to place all economic flows of a project that occur at different points in time into a single year currency so that costs and benefits can be compared.

The rates used are typically around 10%, but try to analyze them with other rates between 5% and 15% to determine if the viability of the project is sensitive to the discount rate. It is  defined by World Bank or the government of the country concerned.

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