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Are these terms are even being introduced to the students in the bachelor's or even master's degree frame of study? Students do study moneyless economies, in fact that is the starting point of studying economics (e.g. see textbooks like MWG Microeconomic Theory). MWG is graduate level text but undergraduate texts such Microeconomics and Behavior by Frank ...


3

In mathematical models of economies (e.g., exchange economies), it is not necessary to include money. Prices do turn up as mathematical constructs ("shadow prices"). Modern economies have money to simplify trade - barter is difficult. You can specify in these models that the interest rate has to be zero. The credit market will most likely not "...


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When r increases it stimulates savings thus lowers demand for liquidity: LM curve shifts to the right. This lowers nominal exchange rate and through increased net exports stimulates income growth, compensating contraction in investments by greater amount. Here what is important is that although money demand L decreases, it decreases for a given income, ...


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The same reason that oversupply leads to falling prices in any other market. There is a huge amount of money out there, and a lack of good returns with adequate levels of safety, so money is cheap. The reason this leads to negative rates is that money, like other goods, has a carrying cost. Keeping physical cash requires heavily secured real estate and is a ...


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If there is inflation, what is your alternative? If you do not lend, your money loses even more of its value. A numerical example: If inflation is 5% and you can lend at 2% nominal interest rate, you can make the loan and lose 3% of your money's purchasing power OR you can not make the loan and lose 5% of your money's purchasing power. Poor choices, but ...


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A(t) represents the amount function, while a(t) represents the accumulation function. Definition 1.1.1: The accumulation function, denoted by a(t), gives the accumulated value at time t of an original investment of 1 at time 0. Definition 1.1.2: The amount function, denoted by A(t), gives the accumulated value at time t of an original investment of k at time ...


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