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How do you use this formula (the Keynesian Demand for Money Equation)?
Md/P = f (i, Y)
When Bond Prices Increase and you sell your bond early, you will experience a capital gain
Keynes speculative motive suggest a negative relationship between interest rates and the demand for money.
Real demand for money = Function of (interest Rates and real income)
Please provide an example question.
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Suppose 2009 is the base year. From 2009 to 2010, the price index increased from 100 to 102.5. if nominal Gross Domestic Product (GDP) is $2,800 in 2010, then the real Gross Product (GDP) in 2010 is
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