UNIT 4 PART 3 FROM THE VIDEO
MONEY MARKET
*DM*
- Why does the demand for money slope downward ?
ANSWER:
-When price is high the quantity demand is low, and when the price is low the quantity demand is high.
- When the interest rate is low then people tend to borrow more for transaction or to hold assess, and when the interest rate is high people tend to borrow less.
*SM*
-The supply of money is vertical because it doesn't vary base on interest rate. Demand for money is tie into the interest rate and the supply of money not because it is fixed and is set by the FED. It doesn't move unless the FED does something to move it.
*DM*
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