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Scenario: Money and Interest Rates
Banks decide to do away with fees charged when other banks' customers use the bank's own ATM.
-(Scenario: Money and Interest Rates) Look at the scenario Money and Interest Rates. If the money supply remains constant, interest rates will likely:

Question

Quizplus · Accepted Answer

With the removal of ATM fees, banks are likely to see an increase in their customer base, as customers will have more incentive to use the bank's ATMs over those of other banks. This increase in demand for the bank's services is likely to result in a decrease in interest rates, as banks will not need to offer higher rates to attract customers. Additionally, the constant money supply indicates a stable market, which further supports the likelihood of decreasing interest rates.

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