Financial Markets - The Demand for Money - Deriving(=afleiden) the demand for money
3 important questions on Financial Markets - The Demand for Money - Deriving(=afleiden) the demand for money
What is the equation describing the demand of money?
See attentively(=aandachtig) the picture!
Explain for both of the 2 variables of the Md equation how they affect the demand for money.
The demand for money:
- increases in proportion to nominal income (€Y). Depends positively.
- depends negatively on the interest rate (L(i) and the negative sign underneath).
How does the graphical expression of the demand for money look like?
See attentively the picture!
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