What Do Economists Mean When They Say That There Is

question 30

Essay

What do economists mean when they say that there is an "excess supply of money" in the economy? Illustrate this situation graphically. If there is an excess supply of money, what happens to the interest rate? How does the change in the interest rate influence the trade-off between holding money and holding bonds?

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Definitions:

Sensory Memory

The very first system in memory, in which raw information from the senses is held for a very brief period of time.

Short-Term Memory

The capacity for holding a small amount of information in mind in an active, readily available state for a short period of time.

Prefrontal Cortex

A region of the brain located at the front of the frontal lobes, associated with complex behaviors, decision making, and moderating social behavior.

Temporal Lobes

Areas of the cortex located along the side of the brain, starting just behind the temples, containing the neurons responsible for the sense of hearing and meaningful speech.