However, fluctuations in the quantity of money are clearly undesirable as they have a negative impact on the real economy, at least in the short run. In relation to Thornton's second accomplishment, the extent to which manufacturers and merchants receive bank loans is determined by the relationship between their expected profit rates and market interest rates.
If the market interest rate is lower than the rate of expected profit, bank lending will increase, the quantity of money will increase, and prices will rise. On the other hand, if the market interest rate is higher than the rate of expected profit, bank lending will decrease, the quantity of money will decrease, and prices will fall.