Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

If the actual real interest rate is different from the equilibrium rate, where demand for funds meets supply, market forces will adjust it. If the

If the actual real interest rate is different from the equilibrium rate, where demand for funds meets supply, market forces will adjust it. If the rate is too low, more people want to borrow than there are funds available, pushing the rate up. If it's too high, there are more funds available than borrowers, which will bring the rate down. This adjustment helps balance the economy's overall levels of savings and investments

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Macroeconomics Principles And Policy

Authors: William J. Baumol, Alan S. Blinder

11th Edition

0324586213, 978-0324586213

More Books

Students also viewed these Economics questions