The actual activity price in a balanced boom equilibrium is determined with the aid of just two forces: the long-run boom fee of TFP and households' fee of time desire (that is, households' preference for modern consumption over future consumption—or their inclination to spend now as an alternative of saving for a future need).
Interest rate degrees are a component of the grant and demand of credit:
an expand in the demand for money or credit will raise interest rates, whilst a minimize in the demand for credit will reduce them.
Learn more about long term interest rate here:
