Interest Rates: a Matter of Supply and Demand

Interest Rates: A Matter of Supply and pick up the States is driven by the economy. When the economy is unsteady, then all Americans suffer, including both business owners and consumers. When wad do not tactile sensation like they have job stability expireing is at a low; however, when people go through unchanging in their job or business and the income is steady, then people feel more comfortable with spending more money. The American direction of buying expensive items, much(prenominal) as cars or houses is to scoop up from financial institutions and pay the money back in meek increments on a monthly basis, with interest of course. However, like close other products and services, interest rates fluctuate depending on the resolve of the economy and supply and contend. Macroeconomics is the study of the economy that considers the problems of inflation, unemployment, business cycles and growing (Colander, 2004, p.12). Interest rates ar classified in the macroeconomic theory. The condition, Interest Rates: A Matter of Supply and Demand explains the reasoning behind the rise and fall of interest rates. Robert Rickles (n.d.), in this article held, When demand for money is high relative to supply, the price - or interest rate - goes up. When demand is low, the price comes down.

The article suggests that there are two primary drivers of interest rates. They are the health of the economy and the government monetary policy. When the economy is steady, people feel comfortable to spend money. In a self-coloured economy, businesses anticipate more income and higher profit margins and consumers feel stable in their job and are more confident to spend money. Consumers and businesses then borrow money from financial institutions for larger purchases, such as land or homes. However, the more money that is loaned out, the less(prenominal) money there is for more loans. As Rickles (n.d.) explains, Higher demand for a smaller supply [of money] is a recipe for increase interest rates. Additionally, in a weaker economy,... If you want to get a full essay, order it on our website: Ordercustompaper.com

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