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Q. Define market for overnight loans?
The market for overnight loans
Overnight interest rates are rates for loans over a single night - these are the shortest of all interest rates. During the day, banks generally have access to interest free loans from central bank. At the end of the day, all such loans should be cleared with the central bank. For this concern, there is a market for loans overnight between banks and overnight interest rate is determined by demand and supply in this market.
The AS curve Say that nominal wage in year 1 (at a particular point in time) is equal to 1000. On the horizontal part of response curve, real wage is constant and equal to its
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