In our discussions of theories of macroeconomic behavior, we have talked about the demand for money function. As we saw, this function is a critical component in the formulation of monetary policy. Moreover, it has been argued over the years that a stable demand function for money is a necessary condition for money to exert a predictable influence on the economy so that control of the monetary aggregates can be a useful instrument of economic policy.
KeywordsMoney Demand Currency Equivalent Gross National Product Monetary Aggregate Partial Adjustment
Unable to display preview. Download preview PDF.