Economics Today: The Macro View (18th Edition)
18th Edition
ISBN: 9780133884876
Author: Roger LeRoy Miller
Publisher: PEARSON
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Question
Chapter 16, Problem 16.1LO
To determine
The key factors influencing quantity of money that people desire to hold.
Expert Solution & Answer
Explanation of Solution
The factors affecting demand for money are as follows:
- The prevailing rates of interest on savings/deposits.
- The expected monetary transactions in present and future.
- The speculating motive of holding money.
- The changes in
Gross Domestic Product (GDP). - The anticipated inflation rate.
- The precautionary motive of holding money.
There are 3 motives for holding money, these are:
- Transaction Motive: It is regarding day to day transactions of sale and purchase of goods and services.
- Speculative Motive: It is related to the future anticipations regarding increase or decrease in prices, the change in interest rates, the inflation rate, etc.
- Precautionary Motive: It is related with safeguarding the future.
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Chapter 16 Solutions
Economics Today: The Macro View (18th Edition)
Ch. 16.E - Prob. 1PCh. 16.E - Prob. 2PCh. 16.E - Prob. 3PCh. 16.E - Prob. 4PCh. 16 - Prob. 16.1LOCh. 16 - Prob. 16.2LOCh. 16 - Prob. 16.3LOCh. 16 - Prob. 16.4LOCh. 16 - Prob. 16.5LOCh. 16 - Prob. 16.1SC
Ch. 16 - Prob. 16.2SCCh. 16 - Prob. 16.3SCCh. 16 - Prob. 16.4SCCh. 16 - Prob. 16.5SCCh. 16 - Prob. 1CTQCh. 16 - Prob. 2CTQCh. 16 - Prob. 1FCTCh. 16 - Prob. 2FCTCh. 16 - Prob. 1PCh. 16 - Prob. 2PCh. 16 - Prob. 3PCh. 16 - Prob. 4PCh. 16 - Prob. 5PCh. 16 - Prob. 6PCh. 16 - Prob. 7PCh. 16 - Prob. 8PCh. 16 - Prob. 9PCh. 16 - Prob. 10PCh. 16 - Prob. 11PCh. 16 - Prob. 12PCh. 16 - Prob. 13PCh. 16 - Prob. 14PCh. 16 - Prob. 15PCh. 16 - Prob. 16PCh. 16 - Prob. 17P
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