Money Demand Term Paper Example | Topics and Well Written Essays - 2000 words

M maviny Demand - Term Paper ExampleThe price variable is the price for domestic cars. Federal Funds regularize is initialized as FFR. It refers to how much an individual citizen of America is giving away just by holding on to one dollar. It is also known as the gets proxy.Money is the defining factor in any economy therefore it is critical to regulate how much one has and how much one intends to spend. For the variety meat that deal with the amount of money that flow in a countrys economy, it is very crucial that the levels are checked regularly. This will help cuss issues like money laundering and exaggerated loan rates. Money laundering is a very common thing in todays world. fluidness is referred to as the extent in which assets or securities can be purchased or sold in the marketplace without affecting the products price. Liquidity as we know it is characterized by relatively high levels of activities in trading. Those assets that are easily bought and sold are considered to be liquid assets.In whatever investment one engages in, there is a measurable amount of liquidity. It is not just because of the amount of the sellers or buyers present but mainly because of the products demand. They are not the akin, but they are similar. Just to illustrate the point, there might be a very high demand for a product but the same products liquidity is low.However, another confusing term that is easily confused with liquidity is marketability. Marketability according to scholars is an assets ability to be converted to cash. Unlike some economic terms that are associated with it, liquidity does not have a formula that can be used so that one can attain its valu1e. Despite this, some people use a technique that gives off a relatively good answer. It is calculating using liquidity ratios.It is considered safer, even indoors the learned circles to invest in liquid assets as compared to the illiquid assets. This is because from an investors point of