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If the demand for money increases and the fed wants interest rates to remain unchanged what would be an appropriate policy?
Wiki User
∙ 10y ago
Buy bonds in the open market
Wiki User
∙ 10y ago
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What is the relationship between demand for money and interest rates?
as interest rates increase, demand for money increases.
Why interest rate has no affect on the aggregate demand?
The interest rate does affect aggregate demand. As the interest rate falls, aggregate demand increases and vice-versa.
Why does the supply curve increase or decrease?
The supply and demand curve follows four basic laws :If demand increases (demand curve shifts to the right) and supply remains unchanged, a shortage occurs, leading to a higher equilibrium price.If demand decreases (demand curve shifts to the left) and supply remains unchanged, a surplus occurs, leading to a lower equilibrium price.If demand remains unchanged and supply increases (supply curve shifts to the right), a surplus occurs, leading to a lower equilibrium price.If demand remains unchanged and supply decreases (supply curve shifts to the left), a shortage occurs, leading to a higher equilibrium price.
What happens to the price of an object when the demand is high?
The first basic law of supply and demand is: If demand increases and supply remains unchanged, a shortage occurs, leading to a higher equilibrium price. So the price goes up.
Does the precautionary demand for money decreases as the interest rate decreases?
Decreases when the inflation rate increases
What is the relationship between demand for money and interest rates?
as interest rates increase, demand for money increases.
Why interest rate has no affect on the aggregate demand?
The interest rate does affect aggregate demand. As the interest rate falls, aggregate demand increases and vice-versa.
Why does the supply curve increase or decrease?
The supply and demand curve follows four basic laws :If demand increases (demand curve shifts to the right) and supply remains unchanged, a shortage occurs, leading to a higher equilibrium price.If demand decreases (demand curve shifts to the left) and supply remains unchanged, a surplus occurs, leading to a lower equilibrium price.If demand remains unchanged and supply increases (supply curve shifts to the right), a surplus occurs, leading to a lower equilibrium price.If demand remains unchanged and supply decreases (supply curve shifts to the left), a shortage occurs, leading to a higher equilibrium price.
When the rate of interest falls the demand for capital?
When the rate of interest falls the demand for capital increases because it is cheaper to borrow money.
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 happens to the price of an object when the demand is high?
The first basic law of supply and demand is: If demand increases and supply remains unchanged, a shortage occurs, leading to a higher equilibrium price. So the price goes up.
Does the precautionary demand for money decreases as the interest rate decreases?
Decreases when the inflation rate increases
Products whose demand remains unchanged regardless of their price?
Such products have an inelastic demand.
What happens to demand if income increases and commodity is normal?
Demand also increases.
How supply and demand affect prices of products and services?
Supply and demand influence market price in various ways. The best known way is when demand is high the price of supply tends to go up. When there is a large amount of supply and demand is low or normal the price of supply tends to go down.
What is the difference between demand and quantity demanded?
demand = how much people want it quantity (supply) = how much you have/can sell When the demand drops, the supply increases, and when the supply increases, the demand drops, but it will turn around again, and when the supply is low, the demand increases, and when the demand increases, and the supply gets lower.
What is it When demand for a good decreases as income increases?
In the case of Inferior goods, the demand decreases as income increases.
