Definition - Money market equilibrium occurs at the interest rate at which the quantity of money demanded equals the quantity of money supplied.
Keynesian concept - John Maynard Keynes developed the theory of liquidity preference, which says that the equilibrium 'price' of money is the interest rate where money supply intersects money demand. The money market is an economic model describing the supply and demand for money in a nation.
What is equilibrium in money market through LM curve? - The derivation of Equation for LM Curve: LM curve is a curve that shows combinations of interest rates and levels of income at which money market is in equilibrium. That means demand for money is equal to supply of money.
What happens when the money market is not in equilibrium? - Interest rates rise until money supply equals money demand. If the actual interest rate is higher than the equilibrium rate, the amount of assets people are holding in a liquid form is greater than the amount they would like to be holding.
Changes in the supply and demand for money. - Changes in the money supply lead to changes in the interest rate. When real GDP increases, there are more goods and services to be bought. More money will be needed to purchase them. On the other hand, a decrease in real GDP will cause the money demand curve to decrease.
What represents supply and demand in the money market graph? The money market captures the demand and supply of money in an economy. The market is illustrated in a graph that represents interest rates, the money supply, and the money demand. The demand curve is downward sloping while the supply curve is vertical. Literature - https://www.google.com/search?q=examples+for+equilibrium+in+the+money+market&source=lnms&tbm=isch&sa=X&ved=2ahUKEwid7vzcy-P-AhVnSPEDHXvYAMQQ_AUoAXoECAEQAw&biw=1536&bih=714&dpr=1.25#imgrc=hONEeGohQ6ToHM
- https://www.google.com/search?q=What+happens+when+the+money+market+is+not+in+equilibrium?&source=lmns&bih=714&biw=1536&hl=ru&sa=X&ved=2ahUKEwj4tM7Jx-P-AhXYsCoKHUl7AtYQ_AUoAHoECAEQAA
Do'stlaringiz bilan baham: |
