Question

How does the role of money differ from the role of interest rate ?

Answer 1

Money can be thought of as any good which can be used for transferring the goods and services. It serves multiple functions in the economy and have three common forms whereas interest rate effectively serves as the cost of money which basically determines the value of money. And these rates are determined by the demand for money and the demand for money is determined by the price level. When the demand for money falls, the interest rate falls and vice versa.