South frica raises interest rates South Africa’s Reserve Bank surprised observers by boosting its main interest rate to 5.5 percent from 5 percent.

Source: BBC, 29 January 2014 Think about the actions of South Africa’s Reserve Bank:

How does the supply of money change when South Africa’s Reserve Bank raises the interest rate?

How does the demand for money change when South Africa’s Reserve Bank raises the interest rate?

Does a change in the nominal interest rate by the Reserve Bank influence the opportunity cost of holding money?