Monetary Policy 2
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is money held to pay for everyday predictable expenses.
Transactions demand for money
is money held to pay unpredictable expenses
Precautionary demand for money
is money held to take advantage of price changes in nonmoney assets
Speculative demand for money
shows the quantity of money people hold at various rates of interest
Demand for money curve
is the view that changes in monetary policy directly change aggregate demand, and thereby prices, real GDP, and employment
is an accounting identity which is the foundation of monetarism. The equation (MV = PQ) states that the money supply times the velocity of money is equal to the price level times real output.
Equation of exchange
is the number of times each dollar is spent.
Velocity of money
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