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Answer the following questions: The relevance of saving and investment for interest rate determination under a fiat money system. (10/100) Explain why the cash rate

Answer the following questions:

  • The relevance of saving and investment for interest rate determination under a fiat money system. (10/100)
    • Explain why the cash rate as determined by the central bank functions as the anchor rate for all interest rates.
    • Explain the degree to which saving and investment may influence longer rates
  • The potential contribution of the interest rate mechanism towards the maintenance of macroeconomic stability (15/100).
    • Explain the nature and relevance of the natural interest rate concept.

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