Describe the process in the money market by which the interest rate reaches its equilibrium value if it starts above equilibrium


If the interest rate is above equilibrium, there is an excess supply of money. People with more money than they want to hold given the current interest rate deposit the money in banks and buy bonds. The increase in funds to lend out causes the interest rate to fall. As the interest rate falls, the quantity of money demanded increases, which tends to diminish the excess supply of money.

Economics

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The consumption function will shift with

A) a decrease in real disposable income. B) a change in saving. C) a change in household wealth. D) an increase in real disposable income.

Economics

A cancer patient is told he needs chemotherapy in order to live three more years at best, but the patient's final three years will be filled with all the terrible side-effects of the treatment

Without it, he will surely die within a year, but his quality of life would be a better. Suppose he chooses to quit chemotherapy and instead he spends his time learning to play the cello, something he always wanted to learn. The economic way of thinking suggests A) others should consider playing the cello while they are still young and healthy. B) the doctors were absolutely right—the patient needs chemotherapy. C) the patient considers playing the cello a substitute for chemotherapy. D) the patient has clearly given up his will to live.

Economics

Suppose the Bureau of Labor Statistics interviews 196,700 people in its monthly survey; 94,500 are not in the labor force, 91,150 are employed, 8,870 are unemployed, and 2,180 are in the armed forces

What is the unemployment rate the BLS announces? A) 8.87 percent B) 9.73 percent C) 9.39 percent D) 4.51 percent E) 10.81 percent

Economics

Which of the following correctly describes factors that contributed to the change in the federal budget deficit between 1990 and 1998?

a. Federal taxes were cut by President George H.W. Bush and Congress in 1990, which helped in his reelection campaign in 1992 and contributed to a continually rising budget deficit during the 1990s. b. Federal taxes were cut again by President Bill Clinton in 1993, which further contributed to a continually rising budget deficit during the 1990s. c. Accelerated growth in federal outlays triggered the rapid expansion of the federal workforce between 1990 and 1998, which further contributed to a continually rising budget deficit during the 1990s. d. Taxes were raised, spending was cut, productivity rose, consumer spending increased, the stock market was the strongest in history, and the country experienced a short-lived budget surplus. e. Defense and international programs were identified as the only two areas of potential spending cuts.

Economics