The equilibrium interest rate is determined by
A)the Fed
B)Congress
C)the demand for money alone
D)the supply of money alone
E)both the supply of and demand for money

Question

Quizplus · Accepted Answer

The equilibrium interest rate is determined by both the supply of and demand for money. The supply of money is determined by the actions of the central bank, such as setting interest rates or buying and selling government securities. The demand for money is determined by factors such as economic growth and inflation expectations. The intersection of these two factors determines the equilibrium interest rate.

The Equilibrium Interest Rate Is Determined by