Macroeconomics

1
Macroeconomics

• ECN 3102 CHAPTER 5

2
The Asset Market, Money, and Prices
3
Chapter Outline

• What Is Money?
• Portfolio Allocation and the Demand for Assets
• The Demand for Money
• Asset Market Equilibrium
• Money Growth and Inflation

4
What Is Money?

• The functions of money
• Measuring moneythe monetary aggregates

5
The money supply

• How does the central bank of a country increase
  the money supply?

6
Portfolio Allocation and the Demand for Assets

• Expected return
• Risk
• Liquidity
• Time to maturity
• Types of assets and their characteristics
• The housing crisis that began in 2007
• Asset Demands

7
The Demand for Money

• Key macroeconomic variables that affect money
  demand
• Price level
• Real income
• Interest rates
• Other factors affecting money demand
• Asset market equilibriuman aggregation
  assumption

8
Money Growth and Inflation

• Application money growth and inflation in the
  Malaysian economies in transition
• The expected inflation rate and the nominal
  interest rate