Money demand/supply

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Money demand/supply Institutional affiliation Student’s name: Abstract The federal government is posing increased interest rates on the auto sales. This means that the market and the economy are significantly going to be affected. With an increase of 0.33 percent increase in 2018 as compared to 2017, there likelihood of increased rates. The paper explores various ways in which this step by the federal government is likely to affect the economy. The customers are currently forced to take long-term loans to cope with these changes. It is necessary to note that all these steps play a significant role in economic operations more so regarding the interest rates both short and long terms. The study gives a better insight on how the money demand and money supply is likely to be affected by an increase in the interest rate. However, it is worth noting that an increased interest rate reduces the quantity of money that circulates in the economy. Introduction On 22nd February 2018, Forbes magazine published that the increasing interest rates are going to affect 2018 auto sales negatively. Through what it described as a headwind for the auto sales in 2018, the rising interest rates turn out to be a mild concern for the auto sales. Summary of the article The federal government is increasing the interest rates, and this is significantly affecting the auto sales this year in 2018.The article indicates that payments are rising and thus hurting the demand for non-luxury commodities at the margin. Through this, the borrowers who have lower credit scores are affected by the higher rates which they are charged. According to Jonathan the chief economist of the Cox

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