ALL Demand for Money (DM) FRQ

ALL Demand for Money (DM) FRQ

Demand for Money Cheat Sheet here.

2017 AP Macroeconomics Exam

If consumers wish to hold less money because the fees on credit cards have been lowered

the DM curve will shift to the left

the NIR will decrease.

2010 AP Macroeconomics Exam

If consumers wish to hold less money because the fees on credit cards have been lowered

the DM curve will shift to the left

the NIR will decrease.

2007 AP Macroeconomics Exam

If people are worried about the state of the world, the stock market, they will tend to take money
out of anything risky (stock market) and hold the cash for mainly two reasons
1) to keep the value of their holdings from decreasing
2) If things are bad people naturally want to hold cash for emergencies

2007B AP Macroeconomics Exam

(A.) Australia begins to recover from their recession, what happens to New Zealand's AD/AS.

If Australia begins to recover they will buy more exports from New Zealand
exports increasing increases New Zealand's AD curve

(B.) Use a Money Market graph to explain what happens to New Zealand's 

(i) Demand for Money. Explain.

(ii) NIR

As New Zealand's AD increases the PL also increases

PL increasing drives up people's demand for Money (DM)

which drives up the NIR

(C.) The PL in New Zealand increases what happens to the Real interest rate.

As the PL increases the Real Interest Rate falls

but

an increasing NIR implies that the RIR is also increasing

RIR is indeterminate