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Markets rates are affected just like any other when demand falls. As demand for any commodity decreases, the market rates tend to spiral as well to a lower rate.
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What happens to money demand when there is an increase in interest rates?
money demand will decrease
Who or what determines the exchange rates in the foreign currency market?
Currently exchange rates are determined by laws of supply and demand.
Flexible exchange rates are determined by?
By the demand and supply of currencies in the global exchange market.
What will interest rates do if the demand for money in the money market exceeds the supply?
If the demand for money is greater than the supply, interest rates will go up.Whenever the demand for anything is greater than the available supply, the price goes up.
What is the merchant market?
The other major market segment is known as the "merchant" or "bulk liquid" market. Customers within this market generally have fluctuating demand rates or operate multiple facilities in scattered locations.
What is the definition of the term market rates?
The market rate is the usual price charged for goods and services in a free market. As the demand and supply of a certain product change so will the price of the items.
How can interest rates push a business cycle into a contraction?
High interest rates can promote saving, which in turn can cause a downturn in demand, causing surplus products on the market.
What happens to the real rate of interest when the demand for capital increases because technology innovations have caused the aggregate investment opportunity set to increase?
Anytime the demand for capital increases, interest rates go up. Supply and demand. The price of money is measured in interest rates.
What determines supply and demand in the foreign-exchange market?
Supply and demand in the foreign-exchange market are determined by changes in many market variables, including relative price levels, real interest rates, productivity, product preferences, and perceptions of economic stability.
How are currency exchange rates are calculated?
Currencies exchange rate are not calculated but determined by the market supply and demand. If the demand is higher than the supply the price will go up and vice versa.
What is the relationship between demand for money and interest rates?
as interest rates increase, demand for money increases.
How are interest rates being affected in the auto industry?
Higher interest rates mean that the demand for cars have increased, due to an increase in consumer demand. Lower interest rates mean that there is a lower demand and the FOMC is lowering the rates to increase consumer demand. Lower rates, however could also increase the demand for cars. This is why the Feds have to higher the interest rates, to ensure that the supply and demand are at an equilibrium point.
