If you were going to write a function for money demand, you would say that the demand for money holdings:

Question

Quizplus · Accepted Answer

According to the widely accepted theory of money demand, the demand for money holdings is determined by the level of nominal income and the nominal interest rate. As nominal income increases, the demand for money increases because people want to hold more money to finance their purchases. On the other hand, as the nominal interest rate increases, the opportunity cost of holding money increases, and people want to hold less cash. Therefore, the demand for money holdings varies inversely with the nominal interest rate and directly with nominal income.

If You Were Going to Write a Function for Money