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24 Aug 2019
1. Suppose banks install automatic teller machines on every blockand, by making cash readily available, reduce the amount of moneypeople want to hold.
a. Assume the Fed does not change the money supply. According tothe theory of liquidity preference, what happens to the interestrate? What happens to aggregate demand?
b. If the Fed wants to stabilize aggregate demand, how should itrespond?
1. Suppose banks install automatic teller machines on every blockand, by making cash readily available, reduce the amount of moneypeople want to hold.
a. Assume the Fed does not change the money supply. According tothe theory of liquidity preference, what happens to the interestrate? What happens to aggregate demand?
b. If the Fed wants to stabilize aggregate demand, how should itrespond?
Casey DurganLv2
25 Aug 2019
