Explain the demand for money and relationship between nominal interest rate and income and price level.
Explanation of Solution
The demand for money refers to the amount of money that people choose to hold or the amount of money held by all wealth holder taken together. If the nominal interest rate increases, then the
In general, if the price level or income increases, then the volume of transaction increases and the benefit of holding money will increase.
Money: Money refers to the medium of exchange in the form of paper, currency, and coins, which are used to make payment for all the commodities and services.
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