― Interest rate of any economy can be determined by the demand and supply of money of this economic system. If demand for money is increase at constant supply then interest rate or cost of borrowing will be increase. On the other hand if money supply is increase at constant demand, then interest rate will be decease of this economy. So market interest rate or cost of borrowing of fund depends on the money demand and supply. ∙ We can show how determination of interest rate by the following [...].