Search results
Results from the WOW.Com Content Network
Ericsson, Hendry and Prestwich (1998) consider a model of money demand based on the various motives outlined above and test it with empirical data. The basic model turns out to work well for the period 1878 to 1975 and there doesn't appear to be much volatility in money demand, in a result analogous to that of Friedman and Schwartz.
The Baumol–Tobin model is an economic model of the transactions demand for money as developed independently by William Baumol (1952) and James Tobin (1956). The theory relies on the tradeoff between the liquidity provided by holding money (the ability to carry out transactions) and the interest forgone by holding one’s assets in the form of non-interest bearing money.
Take the typical supply and demand model: whilst typically one would determine the quantity supplied and demanded to be a function of the price set by the market, it is also possible for the reverse to be true, where producers observe the quantity that consumers demand and then set the price. [2]
The mathematical first order conditions for a maximum of the consumer problem guarantee that the demand for each good is homogeneous of degree zero jointly in nominal prices and nominal wealth, so there is no money illusion. When the prices of goods change, the optimal consumption of these goods will depend on the substitution and income effects.
Banker's algorithm is a resource allocation and deadlock avoidance algorithm developed by Edsger Dijkstra that tests for safety by simulating the allocation of predetermined maximum possible amounts of all resources, and then makes an "s-state" check to test for possible deadlock conditions for all other pending activities, before deciding whether allocation should be allowed to continue.
Starting from one point on the aggregate demand curve, at a particular price level and a quantity of aggregate demand implied by the IS–LM model for that price level, if one considers a higher potential price level, in the IS–LM model the real money supply M/P will be lower and hence the LM curve will be shifted higher, leading to lower ...
A synonymous term is uncompensated demand function, because when the price rises the consumer is not compensated with higher nominal income for the fall in their real income, unlike in the Hicksian demand function. Thus the change in quantity demanded is a combination of a substitution effect and a wealth effect.
The quantity theory of money (often abbreviated QTM) is a hypothesis within monetary economics which states that the general price level of goods and services is directly proportional to the amount of money in circulation (i.e., the money supply), and that the causality runs from money to prices. This implies that the theory potentially ...