Was slightly late to class. Talking about Chapter 16 today.
Talking some about the real estate market problems going on right now, and other stuff in the business sections.
Chapter 16: The Demand for money
Three strategies the Fed can use to control the supply of money
- Required Reserve Rate
- Adjust the Discount Rate
- Trade in government securities
Discussing the reasons people want to hold money balances
- Cambridge Equation
- Inventory Theory of Money Demand
People want to hold on to money in order to conduct business transactions. Otherwise you have to sell your watch when you want to buy lunch.