ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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POLITICS-Consensus Doctrine

banks' interest rate in a competitive environment would be that which equilibrates the flows of financial assets and liabilities so as to remain in the business of financial intermediation and this rate need not at all be the one required to balance ex-ante savings and investment flows which in fact represent real flows of resources. The indeterminacy of such an equilibrium rate is akin to the difficulty of determining the equilibrium exchange rate of a currency. Exchange rates are now as much influenced by capital and othernon-merchandise flows as by traditional merchandise flows.

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