Determine whether each of the following would lead to an increase, a decrease, or no change in the quantity of money people wish to hold. Also determine whether there is a shift in the money demand curve or a movement along a given money demand curve
a. A decrease in the price level
b. An increase in real output
c. An improvement in money?s ability to act as a store of value
d. An increase in the market interest rate
Take a shot. What do you think?
However, first consider why people wish to hold money. Obviously, money is a means of exchange. People also hold money for speculative reasons. That is, money is a asset, which could be used to pounce on investment opportunities that happen to pass by.
1 answer
Decrease increase increase decrease shifrt
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