Which of the following is true about the equilibrium rate of interest?
A)It is constant because of structural forces.
B)At this rate,money demand exceeds money supply.
C)At this rate,money supply exceeds money demand.
D)The Fed can change it by changing the money supply.

Question

Quizplus · Accepted Answer

The equilibrium rate of interest can be influenced by the Federal Reserve (or the Fed) through adjustments in the money supply. By increasing or decreasing the amount of money in circulation, the Fed can affect interest rates, aiming to control inflation, stimulate economic growth, or achieve other macroeconomic objectives. Choices A, B, and C do not accurately describe the dynamics of the equilibrium interest rate.

Which of the Following Is True About the Equilibrium Rate