• What is money, and why does anyone want it?
• Explain the concept of the opportunity cost of holding money .
• Explain why an increase in U.S. interest rates relative to UK interest rates would affect the U.S.-UK exchange rate.
• Suppose that a person's wealth is $50,000 and that her yearly income is $60,000. Also suppose that her money demand function is given by Md = $Y10.35 - i2 Derive the demand for bonds. Suppose the interest rate increases by 10 percentage points. What is the effect on her demand for bonds? b. What are the effects of an increase in income on her demand for money and her demand for bonds? Explain in words