1.
What is the basic determinant of (a) the transactions demand and (b)
the asset demand for money? Explain how these two demands can be
combined graphically to determine total money demand. How is the
equilibrium interest rate in the money market determined?
How
might (a) the expanded use of credit cards, (b) a shortening of worker pay periods and (c) and increase in nominal GDP each independently affect the transactions demand for money, and the equilibrium interest rate?
