If you have a new account but are having problems posting or verifying your account, please email us on hello@boards.ie for help. Thanks :)

Hello all! Please ensure that you are posting a new thread or question in the appropriate forum. The Feedback forum is overwhelmed with questions that are having to be moved elsewhere. If you need help to verify your account contact hello@boards.ie

Real money balances

postalservice · 2010-05-07 10:39:37

Hey there, Kind of confused about what is meant by "real money balances" and "demand for real money balances". Like is it just basically money and demand for money with inflation taken into account? :confused:

07-05-2010 11:39am

#1

postalservice

Registered Users Posts: 362 ✭✭

Join Date: June 2008

Posts: 341

Hey there,

Kind of confused about what is meant by "real money balances" and "demand for real money balances".

Like is it just basically money and demand for money with inflation taken into account?

0

Comments

#2 07-05-2010 12:06pm

Économiste Monétaire

Closed Accounts Posts: 2,208 ✭✭✭

Join Date: March 2008

Posts: 2015

Money supply divided by the price level: M/P. 'Demand for real money balances' is the 'demand' side of the LM equation, with M/P being the 'supply' side. Usually, it's given by L(r,y), which means money demand is a function of the interest rate, r, and income, y.

0