The more volatile are the returns on bonds and stocks, the greater is the demand for money.

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“The more volatile are the returns on bonds and stocks, the greater is the demand for money.” Can you derive this proposition from Tobin’s liquidity preference model? Does it apply to interest-bearing as well as non-interest-bearing money?

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Monetary Economics

ISBN: 9780415772099

2nd Edition

Authors: Jagdish Handa

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Question Posted: Nov 12, 2024 03:00 AM

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The more volatile are the returns on bonds and stocks, the greater is the demand for money.

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Monetary Economics

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