interest rates and economics
so im really perplexed here…
in monetary policy, real interest decrease when the fed injects money.. this reduces the cost of capital and shifts the AD curve up.. and vice versa..
but then why do they say interest rates RISE as the economy is expanding.. and fall when the economy is contracting.. when AD curve goes up when real interest rates go down and AD curve goes down when real interest rates go up?
Is it just the timing of the situation? Am I missing something here? |