Ask Experts Questions for FREE Help !
Ask
    mrmabb's Avatar
    mrmabb Posts: 1, Reputation: 1
    New Member
    		  
    #1

    Oct 22, 2011, 05:26 AM
    Logical route for the relationship between interest rate and issue money
    Hello. I am new to business stream. I was a science student so I am not familiar with the way to think the problem in this subject. I would like to ask about the logical route for the relationship between interest rate and issue money. It seems that this involves the supply and demand theory.
    When the market is in recession. The central bank issue money and loans the money to other banks. Then they hope the other banks lend money to the companies.
    In this case, the interest rate would decrease because of increase in availability of money and 'credit' in a country.
    So, my question is why the interest rate would decrease and I would love a detail answer (like what is the mechanism of this)
    Is it because the supply of money increases, so the banks need to lower their interest rate in order to attract people to borrow from them?

    Also, I would like to ask what is increase in availability of credit? Is it means that more money can be lent to others?

Check out some similar questions!

At the date of a bond issue, the effective rate of interest is significantly above th [ 0 Answers ]

At the date of a bond issue, the effective rate of interest is significantly above the stated rate of interest. If the bond has a $1,000 face value, the proceeds from the issue would be (Points : 2) more than $1,000 less than $1,000 $1,000 $0

Compare effective interest rate to compound rate [ 1 Answers ]

Compare effective interest rate to compound rate, with example of compound rate

Why can banks borrow money at a lower interest rate [ 1 Answers ]

Why can banks borrow money at a lower interest rate than other companies?

Nominal Rate of Interest vs Real Interest Rate [ 1 Answers ]

I need to find for the real rate of Interest?? Nominal Rate of Interest 7.4% and Inflations is 4.5% K = k* + I + (k*x I) 7.4 = k* + 4.5% + (k* x 4.5%) I am trying to find for k*:confused: HELP>>>>

Money issue in relationship [ 11 Answers ]

I am in this relationship since 2003. We broke up for half a year because he wasn't sure I am the one for him. He had been looking for relationship for half a year from on-line dating sites after we broke up. But he can't find any good match, so he asked me to forgive him what he had done and go...

View more questions Search
 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.