Money, the price level, and interest rates
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Money, the price level, and interest rates an introduction to monetary theory by Gail E. Makinen

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Published by Prentice-Hall in Englewood Cliffs, N.J .
Written in English


  • Money.

Book details:

Edition Notes

Includes bibliographies and index.

StatementGail E. Makinen.
LC ClassificationsHG221 .M334
The Physical Object
Paginationxv, 446 p. :
Number of Pages446
ID Numbers
Open LibraryOL4899128M
ISBN 100136004865
LC Control Number76042293

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The late Sidney Homer published the First Edition of A History of Interest Rates in because he believed that a comprehensive history of this universal and basic economic and commercial price was necessary. Now in its Fourth Edition, A History of Interest Rates has become a classic in the fields of economics and by: ADVERTISEMENTS: Learn about the Interrelation between Money, Interest Rates and Prices. Role of Money: Money is one of those concepts which, like a teaspoon or an umbrella, but unlike an earthquake or buttercup, are definable primarily by the use or purpose which they serve. Ralph G. Hawtrey, We all know how important money is [ ]. nal income or between money and either real income or prices separately. Focusing on data from onward destroys this evidence altogether. Evidence indicating cointegration of real income and real money balances, with due allowance for the effect of interest rates, also deteriorates when the sample extends through the 's. Suppose the money market is originally in equilibrium at point A in Figure "Effects of a Price Level Increase" with real money supply M S /P $ ′ and interest rate i $ ′. Suppose the price level increases, ceteris paribus.

Additional Physical Format: Online version: Makinen, Gail E. Money, the price level, and interest rates. Englewood Cliffs, N.J.: Prentice-Hall, ©   Increases in Money Supply are due to government spending, such as the buyback of government bonds. Also the government can change the interest rate of bonds, known as the risk-free rate of return. An increase in Money Supply leads to a decrease in interest rate. The decrease in interest rate leads to increased consumption and investment. Demand for Money? • Interest rates: money pays little or no interest, so the interest rate is the opportunity cost of holding money instead of other assets, like bonds, which have a higher expected return/interest rate. ♦ A higher interest rate means a higher opportunity cost of holding money → lower money Size: 1MB. According to the model, the money demand curve shifts for two major reasons, income and price level, both of which are positively related to demand. In other words, as income increases or the price level rises, the demand for money increases (shifting the money demand curve to the right and thus increasing the interest rate).

Money, Interest Rates, and Monetary Policy. What is the statement on longer-run goals and monetary policy strategy and why does the Federal Open Market Committee put it out? What is the basic legal framework that determines the conduct of monetary policy? What is the difference between monetary policy and fiscal policy, and how are they related? - Price Level Effect: A rise in the price level causes the demand for money at each interest rate to increase, because more money is needed to carry out transactions. People are interested in the real amount of money, i.e. how many goods and services they can buy with theit money. Suppose that the Fed sharply increases the money supply between and In , Maria's wage has risen to $ per hour. The price of a comic book is $ and the price of a donut is $ In , the relative price of a comic book is. Between and , the nominal value of Maria's wage, and the real value of her wage. The demand for money is affected by several factors, including the level of income, interest rates, and inflation as well as uncertainty about the future. The way in which these factors affect money demand is usually explained in terms of the three motives for demanding money: the transactions, the precautionary, and the speculative motives.