MGEA06H3 Lecture Notes - Monetary Transmission Mechanism, Interest Rate, Shortage
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18 Apr 2013
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MGEA06H3 Full Course Notes
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Chapter 28 - money, interest rates, and economic activity. Demand for money total amt of money balances that the public wants to hold for all purposes. Price level real gdp price level demanded interest rate . , dollar value of a given volume of transactions . Monetary equilibrium - md = ms in the market for money, the interest rate is that price that adjusts to bring about equilibrium. Monetary transmission mechanism - the channels by which a change in the demand for or supply of money leads to a shift of the aggregate demand curve: changes in the equilibrium interest rate money supply . => equilibrium interest rate money demand . => excess demand for money => sell bonds. => equilibrium interest rate : changes in desired investment and consumption money supply . => desired investment expenditure : changes in aggregate demand money supply .
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