Sunday, March 29, 2015

Video 2

Video 2
In the second video, the different parts of the money graph are explained. When the DM is downward sloping, it is because when price is high, quantity is low.The relationship between interest and quantity are inversely related. Demand for money is set by the FED; it is fixed. It does not rely on interest rate. Increasing the money supply stabilizes interest rates.

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