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Author Question: Why do people hold money in the classical model? What will be an ideal ... (Read 141 times)

Lisaclaire

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on: Jun 30, 2018
Why do people hold money in the classical model?
 
  What will be an ideal response?

Question 2

In the closed economy IS-LM model, an increase in government spending crowds-out
 
  a. prices.
  b. the money supply.
  c. consumption.
  d. investment.
  e. both c and d.


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emily12345

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Reply #1 on: Jun 30, 2018
Answer to Question 1

People hold money because it is a medium of exchange, meaning that it is used in purchasing goods and services. It is not valued as an asset in and of itself.

Answer to Question 2

D


Lisaclaire

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Reply 2 on: Jun 30, 2018
YES! Correct, THANKS for helping me on my review

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Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

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