1. Using a diagram, explain the effect of interest rate fluctuations on Keynesian money demand for transactions & precau

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1 Using A Diagram Explain The Effect Of Interest Rate Fluctuations On Keynesian Money Demand For Transactions Precau 1 (335.26 KiB) Viewed 3 times

1. Using a diagram, explain the effect of interest rate fluctuations on Keynesian money demand for transactions & precautionary and Keynesian money demand for speculation. 2. Using a diagram, explain how interest rate is determined in the money market according to Keynes's model. A 3. Describe the impact of a reduction in national income on the interest rate equilibrium in the money market according to Keynes's model. 4. Explain what is meant by Keynes's liquidity trap. 5. 'Expansionary of monetary policy will affect the goods market as well as the money market'. Discuss this statement. Given the two LM curve equations, LM1: Y=3000 + 1000r and LM2: Y=5000 + 1500r: a. explain which curve is flatter. b. explain which LM curve brings better economic growth in the event of a fall in the interest rate? 7. What is the relationship between the slope of the LM curve and the slope of money demand curve? 8. Explain all factors that shift the LM curve to the left. 6.