Money Market Graph Why do we have it? What makes the demand curve move?

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Presentation transcript:

Money Market Graph Why do we have it? What makes the demand curve move?

What is this about? What is the money demand curve? Why does the liquidity preference model determine the interest rate in the short run?

The Opportunity Cost of Holding Money The opportunity cost of holding money Changes with the overall level of interest rates Short term interest rates Long-term interest rates

The Money Demand Curve Money Demand The reason for money demand’s downward slope

Shifts of the Money Demand Curve  Price Level  Real GDP  Technology  Institutions

The Equilibrium Interest Rate Liquidity Preference Model of the Interest Rate Money Supply

Two Models of the Interest Rate

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