Real demand for money is positively related to the level of real income in the economy. 7
Real demand for money is positively related to the level of real income in the economy.
75) Financial innovations such as ATMs and electronic banking have caused an increase in the demand for money.
76) Holding the real money supply constant, an increase in real money demand will reduce interest rates.
77) In the money market, an excess demand for money is equivalent to an excess demand for bonds.
78) In the money market, an excess supply of money is equivalent to an excess supply of bonds.
79) The liquidity-money (LM) curve shows the alternative combinations of interest rates and real income that clears the money market.
80) Banks with excess reserves will supply more reserves to the federal funds market as the interest rate increases.