Question
The demand for money decreases the interest rate lowers. The demand for money increases the interest rate rises. The demand for money levels and causes
The demand for money decreases the interest rate lowers. The demand for money increases the interest rate rises. The demand for money levels and causes no change, the interest rate is at equilibrium. I find this true in payday advances with the amount of the short term loan, days for the pay back and the fluctuation that occurs in the interest rate that is determined for the loans.
"An interesting, standard exercise in monetary-macroeconomics inquires into the effects of a reduction in the demand for money. One purpose is to demonstrate that such effects are qualitatively identical to those associated with an increase in the money supply, that is, each occasions an excess supply of money. In those exercises, the avenue through which the reduced money demand occurs is generally left unspecified, principally because it appears to be irrelevant."(2000)
What is your opinion about it?
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