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as interest rates increase, demand for money increases.
money demand will decrease
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.
An increase in interest rates decreases the aggregate demand shifting the curve to the left.
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.
as interest rates increase, demand for money increases.
money demand will decrease
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.
An increase in interest rates decreases the aggregate demand shifting the curve to the left.
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.
Anytime the demand for capital increases, interest rates go up. Supply and demand. The price of money is measured in interest rates.
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.
If banks had less money to loan they would increase their interest rates. This is because they would have to make the most profit off of the little money that they had to use. When banks have a lot of money to loan, interest rates are lower because they can still get a lot of interest even from the lower interest rates.
The major factors that affect the demand for money are price level, interest rates, economy, and the price of money.
Because: Real interest rate occurs when real money demand = money supply When money supply changes, the equilibrium interest rates changes as this equation shows.
Governments decreases interest rates so that, when interest rates are lowered, borrowings will be more cheaper, which would encourage investors borrow more money. This would increase investments in an economy, which would thereby increase production, demand for labor and thereby the average salary, which consequently leads to economic growth.
higher interest rates