Aggregate Model And Aggregate Supply

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AGGREGATE MODEL AND AGGREGATE SUPPLY

Aggregate model and aggregate supply

Aggregate model and Aggregate supply

There are many variables that have an influence over the interest rate. It is therefore important to understand the relationship which exists between various indicators and the levels of interest rate, as it can provide significant information about the expected interest rates of the future. There was a time when the interest rates played an integral in influencing the property market, but with growing times, this has changed to a considerable extent. Now, cuts on interest rates seem to be losing their ability to stimulate the market of property, and this has given rise to concerns regarding the current situation of economy, as banks continue to refuse passing on of full savings.

There are many micro-economic and macro-economic variables which are affected by the changes in interest rates. The short term interest rates are essentially determined by the central bank of the country and even though the Reserve Bank decreased the cash rate about six times in about a year, there has not been an increase in demand from people who would want to buy homes, causing the house prices to end in red at the end of the year. This shows that people are not willing to buy homes even though they know that they would not have to pay much interest now, and it is important to study the reason why there is a lack of demand. There are many micro-economic factors which have an influence over the demand decisions of individuals, and these factors include the disposable income of buyers and the price of the good they are willing to buy. The macroeconomic factors which play a vital role in influencing the buyer's decision include inflation rates and exchange rates of country. It has been noticed ...
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