Balance production and consumer demand

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Reference no: EM133629810

Question

We looked at the balance between production and consumer demand in the form of Aggregate demand. the focus was on the overnight rate and its influence on money demand. We took a look at regulations limiting banks in loaning funds to borrowers and some risk mitigation measures. Continuing into aggregate demand/supply, discussions on the Marginal Propensity to Consume and Save added nuance to understanding consumer behaviour, highlighting the challenge of determining the long-term impacts of consumer spending. What measures could we use to ensure financial stability in our country? Should interest rates be kept low to spur demand or is it better to have a high interest rate to keep inflation at bay? When is a good time to have a high-interest rate vs a Low interest rate?

Reference no: EM133629810

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