The interest rate at which the supply for money meets its demand. The equilibrium rate of interest is used by central banks as a means of managing money supply. For instance, when there is an excess supply of money, the central bank raises the interest which encourages investors to put money into bonds. As the demand for bond rises, the interest rate goes down and eventually achieves equilibrium.
Related information about equilibrium rate of interest:
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The interest rate that clears the market. Also called the trade-clearing interest rate . Equilibrium Rate of Interest. In money markets, an interest rate at which the ...
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Central banks can use the equilibrium rate of interest as a tool in determining the appropriate money supply. Want to thank TFD for its existence? Tell a friend ...
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Definition of equilibrium rate of interest: The interest rate at which the supply for money meets its demand. The equilibrium rate of interest is used by central ...
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The equilibrium rate of interest is the interest rate at which a balance is achieved between money supply and loan demand in a market. This rate will usually be ...
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Apr 7, 2012 ... In general, the natural or equilibrium rate of interest is taken to be the real (not the nominal or “money) rate of interest which keeps inflation at a ...
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A NOTE ON THE EQUILIBRIUM RATE OF INTEREST. MONETARY theory has concerned itself recently with two tasks-to lay bare in an existing situation the ...