In case the question requires us to explain the precautionary demand for money in a country. Concept Introduction: Precautionary demand: Precautionary demand is the demand for liquid money to cover unanticipated expenses such as an accident or health emergency. This money which is kept for the contingencies is the ‘Idle balance’. People with high incomes can afford to keep more liquid money for unforeseen emergencies. Thus Precautionary demand for money is also an increasing function of income level. Liquidity: describe as how quickly an asset can be converted into cash. If you keep the money in some other form of asset, or in bank, you will actually have a separation with the liquid form. Liquidity is the easiness of holding cash form of money rather than any other form. Interest rate is considered as the compensation for separation with the liquidity form of money.

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Answer 1

Question

Chapter 22, Problem 11Q

To determine

In case the question requires us to explain the precautionary demand for money in a country.

Concept Introduction:

Precautionary demand: Precautionary demand is the demand for liquid money to cover unanticipated expenses such as an accident or health emergency. This money which is kept for the contingencies is the ‘Idle balance’. People with high incomes can afford to keep more liquid money for unforeseen emergencies. Thus Precautionary demand for money is also an increasing function of income level.

Liquidity: describe as how quickly an asset can be converted into cash. If you keep the money in some other form of asset, or in bank, you will actually have a separation with the liquid form. Liquidity is the easiness of holding cash form of money rather than any other form. Interest rate is considered as the compensation for separation with the liquidity form of money.

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Answer 2

Question

Chapter 22, Problem 11Q

To determine

In case the question requires us to explain the precautionary demand for money in a country.

Concept Introduction:

Precautionary demand: Precautionary demand is the demand for liquid money to cover unanticipated expenses such as an accident or health emergency. This money which is kept for the contingencies is the ‘Idle balance’. People with high incomes can afford to keep more liquid money for unforeseen emergencies. Thus Precautionary demand for money is also an increasing function of income level.

Liquidity: describe as how quickly an asset can be converted into cash. If you keep the money in some other form of asset, or in bank, you will actually have a separation with the liquid form. Liquidity is the easiness of holding cash form of money rather than any other form. Interest rate is considered as the compensation for separation with the liquidity form of money.

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Answer 3

Question

Chapter 22, Problem 11Q

To determine

In case the question requires us to explain the precautionary demand for money in a country.

Concept Introduction:

Precautionary demand: Precautionary demand is the demand for liquid money to cover unanticipated expenses such as an accident or health emergency. This money which is kept for the contingencies is the ‘Idle balance’. People with high incomes can afford to keep more liquid money for unforeseen emergencies. Thus Precautionary demand for money is also an increasing function of income level.

Liquidity: describe as how quickly an asset can be converted into cash. If you keep the money in some other form of asset, or in bank, you will actually have a separation with the liquid form. Liquidity is the easiness of holding cash form of money rather than any other form. Interest rate is considered as the compensation for separation with the liquidity form of money.

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Answer 4

Question

Chapter 22, Problem 11Q

To determine

In case the question requires us to explain the precautionary demand for money in a country.

Concept Introduction:

Precautionary demand: Precautionary demand is the demand for liquid money to cover unanticipated expenses such as an accident or health emergency. This money which is kept for the contingencies is the ‘Idle balance’. People with high incomes can afford to keep more liquid money for unforeseen emergencies. Thus Precautionary demand for money is also an increasing function of income level.

Liquidity: describe as how quickly an asset can be converted into cash. If you keep the money in some other form of asset, or in bank, you will actually have a separation with the liquid form. Liquidity is the easiness of holding cash form of money rather than any other form. Interest rate is considered as the compensation for separation with the liquidity form of money.

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Answer 5

Chapter 22, Problem 11Q

To determine

In case the question requires us to explain the precautionary demand for money in a country.

Concept Introduction:

Precautionary demand: Precautionary demand is the demand for liquid money to cover unanticipated expenses such as an accident or health emergency. This money which is kept for the contingencies is the ‘Idle balance’. People with high incomes can afford to keep more liquid money for unforeseen emergencies. Thus Precautionary demand for money is also an increasing function of income level.

Liquidity: describe as how quickly an asset can be converted into cash. If you keep the money in some other form of asset, or in bank, you will actually have a separation with the liquid form. Liquidity is the easiness of holding cash form of money rather than any other form. Interest rate is considered as the compensation for separation with the liquidity form of money.

Answer 6

Chapter 22, Problem 11Q

To determine

In case the question requires us to explain the precautionary demand for money in a country.

Concept Introduction:

Precautionary demand: Precautionary demand is the demand for liquid money to cover unanticipated expenses such as an accident or health emergency. This money which is kept for the contingencies is the ‘Idle balance’. People with high incomes can afford to keep more liquid money for unforeseen emergencies. Thus Precautionary demand for money is also an increasing function of income level.

Liquidity: describe as how quickly an asset can be converted into cash. If you keep the money in some other form of asset, or in bank, you will actually have a separation with the liquid form. Liquidity is the easiness of holding cash form of money rather than any other form. Interest rate is considered as the compensation for separation with the liquidity form of money.

Answer 7

Chapter 22, Problem 11Q

To determine

In case the question requires us to explain the precautionary demand for money in a country.

Concept Introduction:

Precautionary demand: Precautionary demand is the demand for liquid money to cover unanticipated expenses such as an accident or health emergency. This money which is kept for the contingencies is the ‘Idle balance’. People with high incomes can afford to keep more liquid money for unforeseen emergencies. Thus Precautionary demand for money is also an increasing function of income level.

Liquidity: describe as how quickly an asset can be converted into cash. If you keep the money in some other form of asset, or in bank, you will actually have a separation with the liquid form. Liquidity is the easiness of holding cash form of money rather than any other form. Interest rate is considered as the compensation for separation with the liquidity form of money.

Answer 8

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Answer 9

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Answer 10

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Answer 11

Ch. 22 - Prob. 1LO Ch. 22 - Prob. 2LO Ch. 22 - Prob. 3LO Ch. 22 - Prob. 4LO Ch. 22 - Prob. 5LO Ch. 22 - Prob. 1Q Ch. 22 - Prob. 2Q Ch. 22 - Prob. 3Q Ch. 22 - Prob. 4Q Ch. 22 - Prob. 5Q

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