4. Market for Money Flashcards
1
Q
Downward slope
Transaction - planned
Precautionary - unplanned
Speculative - investment
A
Demand for money
2
Q
Straight line down
Controls it by moving interest
A
Supply for money
3
Q
P x Y = M x V
- P = price level, GDP Deflator
- Y = output, RGDP
- M = money supply
- V = velocity money
P x Y = nominal (counting price)
A
Equation of Exchange
4
Q
Similar to classical
- Assumes output and velocity at constant
- Expansionary monetary policy will not help
- Restrictive monetary policy will help by stabilizing inflation through decreasing money supply
A
Monetarists
