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10 Cards in this Set
- Front
- Back
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demand for money
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relationship between the quantity of money people want to hold and the factors that determine that quantity
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transactions demand for money
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money people hold to pay for goods and services they anticipate buying
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precautionary demand for money
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The money people hold for contingencies (emergencies)
ie- for home repairs or health needs |
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speculative demand for money
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the money held in response to concern that bond prices and the prices of other financial assets might change
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at lower interest rates, households pursue the _____.
at higher interest rates, households invests in _____ more people are more likely to use bond fund strategy when _______ are lower |
cash strategy
bonds transfer funds |
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demand curve for money
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curve showing the quantity of money demanded at each interest rate, all other things unchanged
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if people expect bond prices to fall, they will _______ their demand for money. If they expect bond prices to rise, they will ______ their demand for money.
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increase
reduce |
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supply curve of money
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the relationship between the quantity of money supplied and the market interest rate, all other determinants of supply unchanged. It is a vertical line because the FEDs determines the reserves.
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money market
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the interaction among institutions through which money is supplied to individuals, firms, and other institutions that demand money
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Money market equilibrium
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occurs at the interest rate at which the quantity of money demanded is equal to the quantity of money supplied
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