Asked Nov 24, 2019

2. How would each of the following affect the demand for money?

  1. a tax on bonds held by individuals
  2. a forecast by the Central bank that interest rates will rise sharply in the next quarter

Expert Answer

Step 1

Demand for Money: It refers to the quantity of assets an individual is willing to hold in the form of money, which depends on various factors such as interest rate of savings account.

Step 2

1)A tax on bonds held by individuals

When there is a tax on holding bonds, it becomes relatively expensive for individuals to hold bond...

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