State 4 Factors Which Affect (shift) The Demand For Money And Describe How Each One Is Correlated (positive Or Negative) With The Demand For Money.

DEMAND FOR MONEYM whatever genes affect the touchstone of capital contended by quite a a little , in the same way that many another(prenominal) factors affect the ingest for goods and services (Mankiw , Principles of Economics , pp . 630 . Firstly , we determine property as the economy s strong point of exchange , so it is be commentary the most liquid asset easy and liquidity refers to the locomote with which that asset is converted into the economy s medium of exchange (Mankiw pp . 736The harbour The Principles of Economics (Mankiw pp . 736-740 ) underlines the factors that affect the quantity demand for notesThe first factor that determines the quantity of demand for money is wind up set out . The interest rate represents the opportunity be of retention money . It operator that when you hold money in y our wallet instead of placing it in an income generating fund like a savings deposit or interest-bearing bond , you suffer the interest that you could have take in .

Therefore , any increase in the interest rate raises the cost of holding money and reduces the quantity of money demanded . In other row , interest rate and quantity of money demanded are negatively tallyPrice level is another factor that affects quantity demand for money When prices rise , people need more money to deal goods and services Thus , quantity demanded for money increases (or positively correlated with increase in pricesIncome . The higher a person s level of income , the hi! gher his level of spending is . This is bodied in the speculation of marginal propensity to spend...If you want to bewilder a wide-eyed essay, order it on our website: OrderCustomPaper.com

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