Blog Video Summaries
3/25/16
2nd Video Summary:
The second video was the introduction to money market graphs.
Dm stands for Demand of Money. It is downward sloping because when interest rates are low, people tend to want to borrow more. Sm stands for Money Supply. This is a vertical line because it doesn't vary based on interest rates because it is fixed and set by the Fed, unless they do something to change it. They may shift it to the right, or increase the Money Supply to stabilize interest rates. A increase in Demand of Money causes it to shift to the right and and an increase in interest rates. A decrease in the Demand of Money causes it to shift to the left and a decrease in interest rates.
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