Q493
If equilibrium interest rate decreases and curve of funding supplied shifts to right and downwards then impact on spending is
A.
increase in near term
B.
decrease in near term
AnswerC.
increase in long term
D.
decrease in long term
Answer: Option B
Solution
Answer: Option B
Solution:
If equilibrium interest rate decreases and curve of funding supplied shifts to right and downwards then impact on spending is decrease in near term. The equilibrium interest rate is the rate at which the quantity of money demanded is equal to the quantity of money supplied. The Federal Reserve can alter the equilibrium interest rate by adjusting the supply of money. The demand for money and supply of money can be graphed to determine the equilibrium interest rate.