In November 2024
Answer to Question #131080 in Macroeconomics for Penilope
Explain, with the aid of a graph, the impact of a cut in the interest rate on the
demand for money.
RELANTIONSHIP BETWEEN INTEREST RATE AND MONEY DEMANDED.
Interest rates are inversely related to demand for money. Therefore fall in the interest rate brings an increase in the quantity of money demanded as shown below.
As shown in the graph, when interest fall (point B) more money is demanded.
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