Economic Essay Example | Topics and Well Written Essays - 500 words

Economic - Essay ExampleThese factors go on to achieve economic objectives, publicise economic growth, and shape fiscal policies. The term currency includes paper money, coins and checking accounts. The demand and supply of such assets delimitate the interest send in an economy. The equilibrium interest rate is determined by the point where square money supply equates the real money demand. The money supply is controlled by the central bank. Real money demand is influenced by the interest rate and is positively correlated with real GDP. Influencing and changing the interest rate from the equilibrium rate results in conversions from (to) interest bearing deposits to (from) money. This allows the government to influence money holdings by the public. spare-time activity pass judgment are also positively related to the price level in a country. safekeeping all other factors constant, a rise (fall) in the real interest rates brings about a rise (fall) in the real GDP. Hence economi c growth could be promoted through interest rates and therefore economic objectives could be achieved. The money market shows the equilibrium interest rates while the international exchange market shows the exchange rate. Combining the two markets yields a money forex diagram.