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  • 15-04-2017
  • Business
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Interest rates in the economy have fallen. how will this affect aggregate demand and equilibrium in the short run?

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Henro
Henro Henro
  • 15-04-2017
Aggregate demand will increase. Lower interest rates means there will be more incentive to invest. This would result in higher consumer expenditure which in turn shift the demand curve right. This will result in an increase of price and supply at equilibrium.
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