Interest Rates

Interest Rates - Determination of Interest Rates Components...

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1 Determination of Interest Rates Components of demand and supply in the market for loanable funds What determines the quantity demanded by each of these components? The supply of loanable funds The equilibrium interest rate
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2 Determination of Interest Rates The impact of economic forces: Changes in economic growth Changes in the inflation rate Changes in the money supply Changes in the government budget deficit/surplus Foreign funds flows
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3 Components of Demand and Supply in the Market for Loanable Funds Households Business Government Foreign entities
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4 What Determines the Quantity Demanded by Each of these Components? Households Loan purpose? Demand for funds depends on disposable income (= income – taxes)
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What Determines the Quantity Demanded by Each of these Components? Businesses Loan Purpose? Demand for funds depends on the number of business projects to be implemented. How does a business decide whether or not
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This note was uploaded on 02/27/2010 for the course FIN 311 taught by Professor Haan during the Spring '10 term at St. Josephs NY.

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Interest Rates - Determination of Interest Rates Components...

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