This preview shows pages 1–2. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: Motives: transaction demand for money Transaction motive ex. Holding money for planned transaction Precautionary Motive ex. Holding money for non-planned transactions Speculative Motive ex. Holding money for good business opportunities Asset Looking for returns, risk, liquid Stocks 1 3 2 Bonds 2 2 2 Money 3 1 1 Risk (treasury bill for bonds somewhat managed by the gov) Money is #1 in two categories; therefore, it is the best financial asset What are the things that affect assets 1. Income 2. Interest rate r L(Y1) L(Y0) M Monetary Policy Demand for Investment Cost of investment interest rate Money supply increase, interest rate goes down, investment goes up, GDP (Y)...
View Full Document
This note was uploaded on 07/05/2011 for the course ECON 1 taught by Professor Nagata during the Spring '08 term at UCLA.
- Spring '08