鲁迪格·多恩布什-宏观经济学（第十三版）IPPTChap016.pptVIP

The Demand for MoneyChapter #16Copyright ? 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. IntroductionWhat is money? Why does anyone want it?In economics, money = medium of exchangeWhatever is accepted in exchangeIn U.S., M1 (currency and checkable deposits) comes closest to defining means of paymentAt the end of 2005, M1 = $4,596 per personDebate whether broader measure, M2, might better meet the definition of money in a modern payment systemDemand for money refers to the stock of assets held as cash, checking accounts, and closely related assets, specifically not generic wealth or income16-2 Components of the Money StockTwo main monetary aggregates in U.S.: M1 and M2M1 comprises those claims that can be used directly, instantly, and without restrictions → LIQUIDM2 includes M1, plus some less liquid assets (ex. savings accounts and money market funds)As liquidity of an asset decreases, the interest yield increasesA typical economic tradeoff: in order to get more liquidity, asset holders have to sacrifice yield 16-3 The Functions of MoneyThere are four traditional functions of money:Medium of exchangeMoney is used to pay for goods and servicesEliminates the need for a “double coincidence of wants”Store of valueAn asset that maintains valueUnit of accountThe unit in which prices are quotedStandard of deferred paymentMoney units are used in long term transactions (ex. loans) 16-4 The Demand for Money: TheoryThe demand for money is the demand for real money balances → people hold money for its purchasing powerTwo implications:Real money demand is unchanged when the price level increases, and all real variables, such as the interest rate, real income, and real wealth, remain unchangedEquivalently, nominal money demand increases in proportion to the increase in the price level, given the real variables just specified16-5 The Demand for Money: TheoryThe theories covered here corr