Comment on this statement: People care about real interest rates, not nominal rates. Therefore, money demand should

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Comment on this statement: “People care about real interest rates, not nominal rates. Therefore, money demand should depend on the difference between the real rates on money and bonds, not the nominal rate on bonds."

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Money Banking and Financial Markets

ISBN: 978-1429244091

2nd edition

Authors: Laurence M. Ball

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Question Posted: Dec 05, 2015 03:40 AM

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Comment on this statement: People care about real interest rates, not nominal rates. Therefore, money demand should

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The real interest rate on a bond is r The real return on money is n Money earns a negative re...View the full answer

Money Banking and Financial Markets

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