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Central banks

Econ Notes

Subject: 
Economics
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economics
macroeconomics
monetary policy
money
inflation
Federal Reserve
Central banks
Economic policy
Federal funds rate
Interest rate
Real interest rate
deflation
Business

Notes Holding Money Means that I have money in such a way that it?s not earning any interest, not circulating, and has zero velocity.? Ex: money in a piggy bank? Demand for Money Transaction Demand Dt For purchase Varies directly with GDP Demand for money increases to purchase that which is produced by the economy, ie, GDP Simplification ( Dt is independent of interest rates) Asset Demand Da Money held as an asset, held for future investment Varies inversely with interest rates (opportunity cost) Precautionary Demand (brought up by Keynes) ?Rainy Day Money? You?re holding onto money for emergencies. Total demand for money, Dm =? Dt + Da and is the supply of money Bonds Bonds = Loans?
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