Write 4 pages thesis on the topic macroeconomic. The cash rate can be changed by the mortgage as well as the rates of business loans. The aggregate economy is often influenced by monetary policy. Suppose the Reserve Bank deals in supplying more money to the commercial banks, those banks will attempt to keep the reserve rate at steady level and launch into lending more cash in the market. This will lead to a fall in the cash rate. The supply of funds can be increased by increasing the average maturity of the repos, expanding the private security ranges. The changes in the monetary policy will shed its effects on the interest rates in the short run and thus the relationship between the cash arte and the interest rates can be easily defined. But it should be kept in mind that the cash rate lacks the potential to determine the level of intermediary’s rates (Campbell, 1997). 2. Analyze the effects of a decrease in the interest rate on consumption and investment expenditures, the level of aggregate demand, the inflation and the unemployment rates. Answer: The changes in the interest rates can shed effects on the consumption spending. With increase in the price levels the interest rates tends to increase.
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