Interest Rate Determination
Completion requirements
Here, you will learn about determining interest rates and how supply and demand play a role in determining interest rates. Pay attention to the Fed's role in this determination and to the effects of the increase of money supply on interest rates. What are the determinants of interest rates?
Effects of a Money Supply Increase
Key Takeaways
- An increase (decrease) in the money supply, ceteris paribus, will cause a decrease (increase) in average interest rates in an economy.