Determinants of Money Demand
TABLE 11.1 Determinants of Money Demand
1. The interest rate: r (The quantity of money demanded is a negative
function of the interest rate.)
2. The dollar volume of transactions
a. Real aggregate output (income): Y (An increase in Y shifts the
money demand curve to the right.)
b. The aggregate price level: P (An increase in P shifts the money
demand curve to the right.)