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

Money Demand - Term root ExampleThe price variable is the price for domestic cars. Federal Funds Rate is initialized as FFR. It refers to how untold an individual citizen of America is giving away just by holding on to one dollar. It is to a fault known as the returns proxy.Money is the defining factor in any preservation therefore it is critical to regulate how much one has and how much one intends to spend. For the organs that deal with the measuring rod of money that flow in a countrys economy, it is very crucial that the levels are check into regularly. This will help cub issues like money clean and exaggerated loan rates. Money laundering is a very common thing in todays world.Liquidity is referred to as the effect in which assets or securities can be purchased or sold in the marketplace without affecting the harvest-festivals price. Liquidity as we know it is characterized by relatively high levels of activities in trading. Those assets that are considerably 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 point of intersections demand. They are not the same, 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 conf exploitation term that is easily confused with liquidity is marketability. Marketability according to scholars is an assets ability to be converted to cash. Unlike many economic terms that are associated with it, liquidity does not have a formula that can be used so that one can find its valu1e. Despite this, roughly people use a technique that gives off a relatively good answer. It is calculating using liquidity ratios.It is considered safer, even within the learned circles to invest in liquid assets as compared to the illiquid assets. This is because fr om an investors point of