• 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 relative interest rate 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 percent points. What is the effect on the demand for bonds?
• what are the effects of an increase in income on her demand for money and her demand for bonds?