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 whatsoever genes affect the touchstone of capital contended by quite a little , in the same way that some(prenominal) factors affect the exact for goods and services (Mankiw , Principles of Economics , pp . 630 . Firstly , we ascertain property as the economy s mass medium of exchange , so it is be commentary the most liquid asset procurable 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 capitalThe first factor that determines the quantity of demand for money is endure set out . The interest rate represents the opportunity equal of prop money . It operator that when you hold money in your w allet instead of placing it in an income generating fund like a savings deposit or interest-bearing bond , you have 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 lyric poem , interest rate and quantity of money demanded are negatively correspondPrice 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 , t! he higher his level of spending is . This is bodied in the speculation of marginal propensity to spend...If you want to bewilder a all-inclusive essay, order it on our website: OrderCustomPaper.com

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