Interest rates can be determined in models of:

Name: Interest rates can be determined in models of:
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Question

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Interest rates can be determined by both the demand and supply of money and the demand and supply of loanable funds. The demand and supply of loanable funds determines the real interest rate, while the demand and supply of money influences inflation expectations and thus the nominal interest rate. Therefore, both models are needed to fully understand and determine interest rates.

Interest Rates Can Be Determined in Models Of