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29 Sep 2019
Assume money demand looks like the following: (M/P)d = L(Y, i) = 2Y/(i0.4)
a. Explain transaction demand for money. Does this money demand equation illustrate transaction demand for money? How? Explain.
b. Explain speculative demand for money. Does this money demand equation illustrate speculative demand for money? How? Explain.
c. Derive an expression for the velocity of money. Show your work.
d. If Real GDP grows at rate g, and the nominal interest rate is constant, at what rate will the demand for real money grow? Show work
Assume money demand looks like the following: (M/P)d = L(Y, i) = 2Y/(i0.4)
a. Explain transaction demand for money. Does this money demand equation illustrate transaction demand for money? How? Explain.
b. Explain speculative demand for money. Does this money demand equation illustrate speculative demand for money? How? Explain.
c. Derive an expression for the velocity of money. Show your work.
d. If Real GDP grows at rate g, and the nominal interest rate is constant, at what rate will the demand for real money grow? Show work
Joshua StredderLv10
29 Sep 2019