Keynes Argued That the Transactions Component of the Demand for Money

question 100

Multiple Choice

Keynes argued that the transactions component of the demand for money was primarily determined by the level of people's ________,which he believed were proportional to ________.

• A)transactions;income
• B)transactions;age
• C)incomes;wealth
• D)incomes;age

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Definitions:

Interest Rate

The amount charged by lenders to borrowers for the use of money, expressed as a percentage of the principal, per unit of time.

Loanable Funds

The money available for borrowing in the financial markets, determined by the savings behavior of individuals and institutions and the central bank's monetary policy.

Investment Spending

Investment spending refers to expenditures made by businesses or individuals on capital goods intended to be used for future production.

Present Value

The contemporary value of a future financial amount or series of cash movements, given a pre-specified rate of return.