Demanded for money has an inverse relationship between nominal interest rates and the quantity of money demanded.
Quantity demanded rate: increases of money. Quantity demanded: decrease
- QD decreases interest rates
- QD increases cash
Demanded for money
- Money demanded shift
- Change in price level
- Change in income
- Change in taxation that affects investment
- Nominal interest rate (IR) on y-axis
- Quantity of money on x-axis
The money demanded curve slopes down and to the right because all else being equal, higher interest rates increase the opportunity cost of holding money, they're leading public to reduce quantity of money it demanded.
No comments:
Post a Comment