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The Total Demand for Money Is Equal to the Transactions

question 24

Essay

The total demand for money is equal to the transactions demand plus the asset demand for money.
(a)Assume that each dollar held for transactions purposes is spent on the average five times per year to buy final goods and services.If nominal GDP is $1,000 billion (or $1 trillion),what is the transactions demand?
(b)The table below shows the asset demand at certain rates of interest.Using your answer to part (a),complete the table to show the total demand for money at various rates of interest.


Definitions:

Constituencies

The body of voters or residents in a specified area who are entitled to elect a representative to a legislative or other public body.

Appropriation

The legislative process of allocating funds to specific governmental purposes, projects, or activities.

Department of Transportation

A federal Cabinet department of the U.S. government concerned with transportation, responsible for highways, railroads, aviation, and maritime shipping.

Spending Bill

Legislation proposed and passed by a legislative body that authorizes government spending on specific programs, services, or activities.

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