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4. In the liquidity preference theory. Real GDP is used as a proxy to measure money dernand a What kind of correlation (positive or negative)
4. In the liquidity preference theory. Real GDP is used as a proxy to measure money dernand a What kind of correlation (positive or negative) is there between Real GDP and demand for money? 1 Why does that correlation exist? b. In an attempt to stem corruption and counterfeiting, the Indian government unexpectedly demonetized 500 and 1,000 rupee notes in November 2016. Those bills were no longer legal to use. At that time, more than 90% of the nation's financial transactions were conducted in cash; more than 85% of India's workers were paid in cash, and, finally, about 50% of the nation's population were unbanked a. What could have happened as a result of demonetization of commonly used rupee notes/bills? b. What function of money must have affected the economic activity significantly? c. If a similar demonetization experiment is conducted in the US, e.g., demonetizing $ 10 and $20 bills, will it have similar effect? Briefly explain why
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