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Creation of the money supply reduce interest rates

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This brings us back to the fears of higher investment rates before the market break. These fears are still potent, especially if investors see through the temporary reduction in interest rates made possible by stepping up the rate of creation of the money supply.

a) How does stepping up the rate of creation of the money supply reduce interest rates?

b) Why would it be only temporary?

Reference no: EM132051584

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