equilibrium rate of interest

Definition

The interest rate at which the supply for money meets its demand. The equilibrium rate of interest is used by central banks as a means of managing money supply. For instance, when there is an excess supply of money, the central bank raises the interest which encourages investors to put money into bonds. As the demand for bond rises, the interest rate goes down and eventually achieves equilibrium.

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You should try and figure out what the equilibrium rate of interest will be so that you can budget for it.

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The equilibrium rate of interest was met as all of the demands for capital was being equally met with supply

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The equilibrium rate of interest was a hard thing for me to figure out so I had someone else do it instead of me.

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