After Allowing for Inflation Expectations Why Does Real Money Demand

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The Answer is The real return on interest earning assets is r which equals i -

The real return on interest earning assets is r which equals i - . The real return on money is - . Money demand then depends on the difference between the real return on assets and the real return on money, i = - (- ) which equals i. Thus money demand continues to be negatively related to the nominal rate of interest.

. The real return on money is - The real return on interest earning assets is r which equals i - . The real return on money is - . Money demand then depends on the difference between the real return on assets and the real return on money, i = - (- ) which equals i. Thus money demand continues to be negatively related to the nominal rate of interest.

. Money demand then depends on the difference between the real return on assets and the real return on money, i = The real return on interest earning assets is r which equals i - . The real return on money is - . Money demand then depends on the difference between the real return on assets and the real return on money, i = - (- ) which equals i. Thus money demand continues to be negatively related to the nominal rate of interest.

- (-

) which equals i. Thus money demand continues to be negatively related to the nominal rate of interest.

After Allowing for Inflation Expectations Why Does Real Money Demand

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