ATTEMPT ALL QUESTIONS ON THEORIES OF MONEY DEMAND

State the classical quantity theory of money demand                                 (4 mrks)

Given that the quantity of money in an economy is shs 1,000,000, its velocity of circulation is 20 and the numbers of transactions made are 250. Calculate the general price level in an economy                                               (6 mrks)

Given that the volume of money in an economy is 20 billion; total level of transactions is 250 and the transactions velocity of money is 20; calculate the price

(6 mrks)

State Irving Fisher’s equation of exchange                                (02 marks)

How is the value of money determined in Fisher’s equation of exchange? (02 marks)

What are some of the assumptions of the quantity theory of money    (6 mrks)

Is quantity theory of money demand relevant? If yes, show its relevancy (6 mrks)

List down the limitations of the quantity theory                                  (10 mrks)

How does keynesian theory of money demand states                          (2 mrks)

Graphically explain what liquidity trap means                                    (2 mrks)

What are some of those factors that influence liquidity preference in an economy (06 mrks)