money demand will decrease
as interest rates increase, demand for money increases.
he LM curve is flat when money demand is very responsive to interest rates. That is, when you have a flat money demand curve. Interest rates only have to increase by a little in order to get rid of bonds since money demand is very reactive to interest rates.
It shifts to the left
To understand why the interest rate spread is a leading indicator, one must interpret the interest rate as the price of money. A high interest rate means that obtaining money is costly. If interest rate spreads are great, this means investors are anticipating an increase in the price of money. The price of money will increase due to an increase in the quantity of money demanded (and an increase in demand). Investors see the economy recovering, and in the process of this recovery, they see an increase in demand for money (loans etc.) to buy new capital and purchase other nondurables. Therefore the price of money increases and thus the spread increases.
This depends on a range of factors, including what cause the change, whether the change was in quantity along a curve or a shift of the curve, the monetary regime in place in the country, and the decision of that regime in regards to increased money demand. However, the simplest way to restore money demand to its original location would be to raise the interest rate, thus making it most costly to hold money and decreasing money demand. So if the regime wished to restore money demand, then it would raise the real interest rate.
as interest rates increase, demand for money increases.
Anytime the demand for capital increases, interest rates go up. Supply and demand. The price of money is measured in interest rates.
Someone makes money
he LM curve is flat when money demand is very responsive to interest rates. That is, when you have a flat money demand curve. Interest rates only have to increase by a little in order to get rid of bonds since money demand is very reactive to interest rates.
It shifts to the left
To understand why the interest rate spread is a leading indicator, one must interpret the interest rate as the price of money. A high interest rate means that obtaining money is costly. If interest rate spreads are great, this means investors are anticipating an increase in the price of money. The price of money will increase due to an increase in the quantity of money demanded (and an increase in demand). Investors see the economy recovering, and in the process of this recovery, they see an increase in demand for money (loans etc.) to buy new capital and purchase other nondurables. Therefore the price of money increases and thus the spread increases.
it will increase
This depends on a range of factors, including what cause the change, whether the change was in quantity along a curve or a shift of the curve, the monetary regime in place in the country, and the decision of that regime in regards to increased money demand. However, the simplest way to restore money demand to its original location would be to raise the interest rate, thus making it most costly to hold money and decreasing money demand. So if the regime wished to restore money demand, then it would raise the real interest rate.
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.
Asset demand for money is dependent on interest rates. The money slope goes down if interest rate goes down. In contrast, money slope goes up if interest rate goes up.
When the rate of interest falls the demand for capital increases because it is cheaper to borrow money.
the price of borrowing money