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    Effects of economic parameters to the demand for money

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    What would be the effect of each of the following on the money demand, M1 (with other things held equal)?
    a. An increase in real GDP
    b. An increase in the price level
    c. A rise in the interest rate on savings accounts and treasury securities.
    d. A doubling of all prices, wages, and incomes (calculate the ecact effect on the money demand.)
    e. An increase in the interest rate banks pay on checking accounts.

    With a graphic for each answer. Please see attached documents for help.

    © BrainMass Inc. brainmass.com April 3, 2020, 9:46 pm ad1c9bdddf
    https://brainmass.com/economics/monetary-economics/effects-economic-parameters-demand-money-401685

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    Effect of each of the following on the money demand, M1 (with other things held equal)

    a. An increase in real GDP
    The increase in GDP, Money Demand increases.
    An increase in real GDP increases the volume of expenditure, which increases the quantity of money that people plan to hold
    An increase in real GDP caused by increased per capita income will ...

    Solution Summary

    This solution illustrates what will happen to the demand for money given a situation where there is an increase in real GDP, price level, and interest rates. A graphical presentation is attached.

    $2.19

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