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how financial market achieve equilibrium
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how financial market achieve equilibrium Related: Equilibrium in Fina...
equilibrium conditions- where money supply equals money demand
money supply generally given as a constant (vertical line)
doesn't change w/ interest rate
Ms = Md
Md / $Y = L(i)
Md / $Y - ratio of money demand to nominal income (fraction of total income that ppl hold as money)
LM relation - equilibrium at intersection of money supply and money demand (downward sloping curve dependent on interest rate i from L(i))
interest at level that that cause ppl to hold Md equal to Ms
if Md=Ms then Bd=Bs since (wealth = B+D and wealth stays constant)
changes in $Y >> shift of Md curve
changes in interest rate >> mov't along curve
money supply (not dependent on interest rate at all)
money demand
equilibrium
higher $Y >> higher interest rate
lower $Y >> lower interest rate
money demand always equals money supply at equilibrium, so interest rate adjusts
need higher interest rate w/ higher income to compel consumers to invest and have the same money demand as before, etc
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how financial market achieve equilibrium Related: Equilibrium in Financial Markets - Financial Markets and Institutions?
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how financial market achieve equilibrium Related: Equilibrium in Financial Markets - Financial Markets and Institutions? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about how financial market achieve equilibrium Related: Equilibrium in Financial Markets - Financial Markets and Institutions? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for how financial market achieve equilibrium Related: Equilibrium in Financial Markets - Financial Markets and Institutions?.
how financial market achieve equilibrium Related: Equilibrium in Financial Markets - Financial Markets and Institutions? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about how financial market achieve equilibrium Related: Equilibrium in Financial Markets - Financial Markets and Institutions? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for how financial market achieve equilibrium Related: Equilibrium in Financial Markets - Financial Markets and Institutions?.
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