State 4 Factors Which Affect (shift) The Demand For Money And Describe How Each One Is Correlated (positive Or Negative) With The Demand For Money.

DEMAND FOR MONEYMevery genes affect the touchstone of capital contended by sooner a little , in the same way that many a(prenominal) factors affect the indigence for goods and services (Mankiw , Principles of Economics , pp . 630 . Firstly , we settle property as the economy s intermediate of exchange , so it is be commentary the most liquid asset easy and liquidity refers to the locomote with which that asset is converted into the economy s medium of exchange (Mankiw pp . 736The harbour The Principles of Economics (Mankiw pp . 736-740 ) underlines the factors that affect the quantity demand for currencyThe first factor that determines the quantity of demand for money is posit set out . The interest rate represents the opportunity cost of belongings money . It operator that when you hold money in your wall et instead of placing it in an income generating fund like a savings deposit or interest-bearing bond , you resort the interest that you could have take in .

Therefore , any increase in the interest rate raises the cost of holding money and reduces the quantity of money demanded . In other run-in , interest rate and quantity of money demanded are negatively agreePrice aim is another factor that affects quantity demand for money When prices rise , people need more money to secure goods and services Thus , quantity demanded for money increases (or positively correlated with increase in pricesIncome . The hi gher a person s level of income , the highe! r his level of spending is . This is bodied in the possible action of marginal propensity to spend...If you want to bewilder a teeming essay, order it on our website: OrderCustomPaper.com

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