Economics

The Money Market and The Interest Rate Do people always want as much money as possible? YES. However, when we talk about demand we know that there are sacrifices that have to be given up, specifically every individual faces a constraint. So the demand for money is how much money people would like to hold, given the constraints that they face. An individual's demand for money Money is one of the forms in which people …

…equipment 2) The interest rate is the opportunity cost of the firm's own funds when they are spent on plant and equipment. 3) Affect spending on new houses. When the interest rate is lower families find it more affordable to buy homes. 4) The interest rate affects consumption spending on big ticket items like cars, furniture, and dishwashers. These are called durable goods because they last several year and people often borrow to buy consumer durables. ------------------------------------------------------------------------ **Bibliography**