Explain the three different types of money demand.
What will be an ideal response?
Transaction demand refers to the demand for money based on the desire to facilitate transactions, because money makes it easier to conduct everyday transactions. Liquidity demand refers to the desire to hold money to make transactions on quick notice without incurring excessive costs. Speculative demand refers to holding money during periods of economic volatility when money is believed to be a safer asset than stocks or bonds.
You might also like to view...
In the following table, fill in the columns for your return on investment if the price of your house increased or decreased by 20 percent, based on the down payments specified in the first column
Return on Your Investment From Down Payment A 20 Percent Increase in the Price of Your House A 20 Percent Decrease in the Price of Your House 100% 20 10 5
Figure 32.1 represents the market for loanable funds. Which of the following is true at the equilibrium interest rate?
A. The rate of return on capital is greater than the interest rate. B. The rate of return on capital equals the interest rate. C. The rate of return on capital is less than the interest rate. D. There is no relationship between the rate of return on capital and the interest rate.
About how many Americans still live on farms today?
A. 4.5 million B. 14.5 million C. 24.5 million D. 34.5 million
Year-to-year movements in real exchange rates between industrialized countries like the U.S. and Canada are caused mostly by
A) changes in relative rates of inflation. B) changes in relative growth rates of output. C) changes in quotas or tariffs. D) changes in capital controls. E) changes in nominal exchange rates.