Why do interest rates increase with increase demand for money?
Answers
Answered by
1
Hlo dear brainly user....
It's your answer....
@@ Intrest rates increase with increase in demand for money because.....
* If in the economy there is a high demand of money in terms of loans that means it is a situation of inflation...
* So to reduce the inflation and struck the equilibrium of money flow intrest rates also shot up....
* Because of high interest rates people use to take less loans and economic Equilibrium will struck...
### Good luck !!!
It's your answer....
@@ Intrest rates increase with increase in demand for money because.....
* If in the economy there is a high demand of money in terms of loans that means it is a situation of inflation...
* So to reduce the inflation and struck the equilibrium of money flow intrest rates also shot up....
* Because of high interest rates people use to take less loans and economic Equilibrium will struck...
### Good luck !!!
CaptainKhan:
Hi
u interest in economy
that's greta
great*
Answered by
0
Higher interest rates raise the opportunity cost of holding cash. ... As the interest rate rises thedemand for the money decreases in the borrowing market. The same effect a price rise of a good makes on its demand. So if the demand of themoney increases, it would pull up the interest rates.
Similar questions