Explain the three different types of money demand.
What will be an ideal response?
Transaction demand refers to the demand for money based on the desire to facilitate transactions, because money makes it easier to conduct everyday transactions. Liquidity demand refers to the desire to hold money to make transactions on quick notice without incurring excessive costs. Speculative demand refers to holding money during periods of economic volatility when money is believed to be a safer asset than stocks or bonds.
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The price elasticity of demand is the ratio of the change in quantity demanded to the change in price
a. True b. False Indicate whether the statement is true or false
A lump-sum tax
a. is most frequently used to tax real property. b. does not distort incentives. c. distorts incentives more than any other type of tax. d. is the most fair tax.