In 2007, interest rates in Germany were 4.7 percent while the inflation rate was 1.7 percent. In 2008, interest rates increased to 5.3 percent and the inflation rate increased to 2.0. As a result, there is

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With an increase in both interest rates and inflation rates, there is an upward pressure on the demand for money in Germany. This implies that individuals and firms would require more money to be able to afford the higher interest rates and the increased cost of goods due to inflation. As a result, there would be an upward movement along Germany's demand for money curve.

In 2007, Interest Rates in Germany Were 4