Monetary Policy

Running head: THE AFFECTS OF MONETARY POLICY The affects of Monetary Policy Steven Stetler Central azimuth College ECN 201-Principles of Macroeconomics James Cadena June 27, 2010 The affects of Monetary Policy Money is a constant beg from nation. Money and its inevitable wealth is what people need to sustain daylight-to-day in the world. While trade has evolved and notes has suit the more predominant item of trade, people tend to look on money to obtain their needs, wants and pick outs. The existence of money brings roughly the need for monetary policy. This paper lead discuss demands that people have for money, what monetary policy is, and the affects monetary policy has on prices, employment and output. Monetary policy not only affects the money supply, monetary policy affects everyone. Three lineaments of demands exist for money. The first is the transactions demand for money. Transactions demands for money are for every day expenses to run a household. This type of demand is an everyday demand that people fulfill by working or acceptance money to meet the payment amounts due. The amounts due are sure expenses such as mortgage payments, rent payments, or other items of that nature. These demands require a person to keep a blood on hand of money to pay those expenses.

Anything in surplus would be considered a precautionary demand for money. For the second type of demand (precautionary demand), the stock of money held is a barely in case fund. People try to hold money for items comparable a car breaking down or an unthought-of medical expense. This type of demand usually is held in savings accounts or in bank accounts to keep people from spending it so fast. The final type of demand is a sorry demand for money. This type of demand is held for the future for expected changes in the prices of stocks or bonds, (Tucker, 2008). Supply and demand do not just apply to goods and services. Supply and demand also applies to money. People will demand money if... If you want to get a adept essay, order it on our website: Orderessay

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