Explain how one carries the effect from md2010 to md2011

Reference no: EM13237680

There is an opportunity to translate your intuitive thinking into algebraic form.
Money demand refers to the amount of money (either in the form of cash or in the checking account or in any other form that can be used to pay for a purchase or service immediately).

a) List all the factors that would influence/determine this amount. Assign a letter to each factor. Considering that money demand can be expressed as Md, write a functional form for money demand with the factors you mentioned as the independent variables.

b) If Md2010 is the amount demanded in 2010 and Md2011 is the amount demanded in 2011, explain how (direction and why) ONE variable you mentioned in part a) carries the effect from Md2010 to Md2011.

Reference no: EM13237680

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