Demand for Money and the Equilibrium Interest Rate

By Guy Pascale on youtube.com

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This video lecture series focuses on macroeconomics and the demand for money. The money demand curve is a downward sloping curve and is determined by the price level and income. The Federal Reserve controls the money supply and the equilibrium is determined by the intersection of money demand and money supply. If the interest rate is not at the equilibrium amount, the market will move the interest rate to the equilibrium. An increase in money supply will cause the equilibrium interest rate to fall, and an increase in money demand will cause the equilibrium interest rate to rise."