liquidity increases

What Do Interest Rates Generally Reflect?

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What Do Interest Rates Generally Reflect? The real interest rate adjusts the observed market interest rate for the effects of inflation. The real interest rate reflects the purchasing power value of the interest paid on an investment or loan and represents the rate of time-preference of the borrower and lender. What does real interest rate

What Causes Equilibrium Interest Rate To Increase?

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What Causes Equilibrium Interest Rate To Increase? The price level increases when the overall cost of goods increases. As price levels increase, the demand for money increases. In the chart, this position is higher on the demand curve, and therefore the equilibrium interest rate is higher. What causes the interest rate to increase? Interest rate