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5: The Economics of Interest-Rate Fluctuations

  • Anonymous
  • LibreTexts

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Learning Objectives

By the end of this chapter, students should be able to

  • Describe, at the first level of analysis, the factors that cause changes in the interest rate.
  • List and explain four major factors that determine the quantity demanded of an asset.
  • List and explain three major factors that cause shifts in the bond supply curve.
  • Explain why the Fisher Equation holds; that is, explain why the expectation of higher inflation leads to a higher nominal interest rate.
  • Predict, in a general way, what will happen to the interest rate during an economic expansion or contraction and explain why.
  • Discuss how changes in the money supply may affect interest rates.

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This page titled 5: The Economics of Interest-Rate Fluctuations is shared under a CC BY-NC-SA 3.0 license and was authored, remixed, and/or curated by Anonymous via source content that was edited to the style and standards of the LibreTexts platform.

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