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Nilanjan Bhowmick AIR 3, CSIR NET (Earth Science)
- UGC NET
- Economics
48. which ol the 1ollowing will most likely occur in an economy if more noney demanded than is supplied? i (1) the amount of investment will increase (2) intere
48. Which ol the 1ollowing will most likely occur in an economy if more noney demanded than is supplied? i (1) The amount of investment will increase (2) Interest rates will increase (3) The demand curve for money will shift to thc lelt A) The demand curve for money will shift to the right 9. In the country banks charge 10 percent interest on all loans. If the general price Icvel has been increasing at the rate of 4 percent per year, the real rate of interest in the country is (2) 10% (3) 6% (4) 4% (1) 14%
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Nidhi taparia Best Answer
48. The right answer is (2) interest rate will rise. Just like any commodity, when the demand for money rises ahead of its supply, the price of money will rise. And price of money is nothing but interest rate.
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Nidhi taparia![best-answer]()
49. Option (3) 6% is right. Real interest rate = Nominal interest rate - rate of inflation.