Class Notes (834,799)
Canada (508,727)
Economics (1,590)
ECO102H1 (155)
Jack Carr (32)
Lecture 37

Lecture 37-The Demand for Money

4 Pages
71 Views
Unlock Document

Department
Economics
Course
ECO102H1
Professor
Jack Carr
Semester
Winter

Description
th Thursday, March 11 , 2010 Interest Rate Determination (Short-Run) Money Supply: Currency + bank deposits Money Supply, Money Demand: determine interest rate What are determinants of Money demand? The Demand for Money: Intuition Households hold two assets Money (currency + bank deposits): pays no interest Bonds: pay interest You have: money $1,000 Bonds $10,000 Would you increase or reduce money holdings if: (1) The interest rate rises from 5% to 10%? (2) Your income rises, so you will be spending more on goods and services? (3) Prices in the economy increase, so you will have to pay more for the same goods and services you plan to purchase? Demand for Money Result Reason Falls as interest rates 1. Money does not pay interest increases 2. opportunity cost (interest forgone) of holding money increases Rises as real GDP increases real volume of transactions increases Rises (proportionately) dollar volume of transactions increases as price level increases Symbol for interest rate Lectures: r Lipsey-Ragen: i www.notesolution.com
More Less

Related notes for ECO102H1

Log In


OR

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


OR

By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.


Submit