Economics, Econometrics and Finance
8 years ago

Interest rates impact economy through money demand, changing financial landscape.

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The demand for money and the rate of interest
Stephen Rousseas

Paper Summary

Money serves as a way to pay for things and save money. Keynes showed that changes in the amount of money people want can affect the economy through interest rates. He thought the amount of money was controlled by the central bank. This means the central bank can change the amount of money in response to what they want to happen in the economy.

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