In the infinite variety of life, Mercury determines your fascinations, what kinds of puzzles youâll want to work out, where youâd like to focus your mind power. Mercuryâs influence on how you think can steer your career path, since youâll likely be drawn to areas in which your mind thrives and excels.
Goods market equilibrium occurs when the amount of desired saving and desired investment are equal, i.e. no unplanned changes in inventory. Both the investment and saving curvâ¦es are a function of the real interest rate.
The final equilibrium will occur at point B on the diagram. As the interest rate rises from i$' to i$, real money demand will have fallen from 2 to 1. Thus, an increase in real GDP (i.e., economic growth) will cause an increase in average interest rates in an economy. In contrast, a decrease in real GDP ( a recession) will cause a decrease in average interest rates in an economy. International Finance Theory and Policy - Chapter 40-11: Last Updated on 1/11/05.