Chapter 14 Notes

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Department
Economics for Management Studies
Course
MGEC61H3
Professor
Iris Au
Semester
Summer

Description
Chapter 14: Money, Interest Rate, and Exchange Rate Money Defined: A Brief Review How the Money Supply Is Determined Money supply: Currency circulation + Demand deposit. A countrys money supply is determined by its central bank, i.e., we take money supply as given. Graphically, R MP MSP Aggregate Money Demand Aggregate money demand: the total demand for money by all households and firms in the economy. Three factors affectdetermine aggregate money demand: 1) The (nominal) interest rate, R: 2) The price level, P: 3) Real national income, Y: ECMC61 Chapter 14 1 www.notesolution.com
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