Skip to main content
Business LibreTexts

7: Interest Rate Determination

  • Page ID
    • vendetta-157703_960_720.png
    • Contributed by No Attribution by request
    • Anonymous by request

    Money is a critical component of a modern economy because it facilitates voluntary exchanges. What exactly money is and how it fulfills this role is not widely understood. This chapter defines money and explains how a country’s central bank determines the amount of money available in an economy. It also shows how changes in the amount of money in a country influence two very important macroeconomic variables: the interest rate and the inflation rate.

    • Was this article helpful?