How will the following events affect the demand for money? In each case, specify whether there is
Question:
How will the following events affect the demand for money? In each case, specify whether there is a shift of the demand curve or a movement along the demand curve and its direction.
a There is a fall in the interest rate from 12% to 10%.
b. Thanksgiving arrives and, with it, the beginning of the holiday shopping season.
c. Increasingly, merchants are adopting electronic payment systems that allow more consumers to use PayPal and Apple Pay to make purchases.
d. The Fed engages in an open-market purchase of U.S. Treasury bills. 3.a. Go to www.treasurydirect.gov. Under “Individuals,” go to “Treasury Securities & Programs.” Click on “Treasury bills.” Under “at a glance,” click on “rates in recent auctions.” What is the investment rate for the most recently issued 52-
week T-bills?
b. Go to the website of your favorite bank. What is the interest rate for one-year CDs?
c. Why are the rates for one-year CDs higher than for 52-week Treasury bills?
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