The Fed - Money supply and demand determine the interest rate

5 important questions on The Fed - Money supply and demand determine the interest rate

How are interest rates determined?

The price of money is influenced by money supply and money demand.

What controls the money supply?

The Fed influences the money supply through its policies.

How does the Fed affect interest rates?

By adjusting the money supply and buying/selling bonds, rates change.
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What factors influence the balance that shifts interest rates?

Both money supply and money demand contribute to shifting interest rates.

What does money demand reflect?

It indicates how much liquidity households and businesses wish to hold.

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