ch fiscal policy.pptVIP

Money and Interest Rates Choosing between consumption and savings The Market Interest Rate What determines the equilibrium interest rate in financial markets? A financial market is any market in which borrowers and lenders interact The supply of funds being forwarded by lenders and the demand for funds by borrowers determines both the quantity of lending/borrowing and the interest rate at which these loans are made. One way to analyze this market would be to directly examine the supply and demand for bonds (loans). An alternative method would be to examine the supply and demand for money Th