Principles of Macroeconomics / Unit 18 MAC 1711 short lesson, about 20 seconds
Model Four: The Money Market
Captions available
The idea
The quantity of money against the interest rate. Demand slopes down because holding money costs the interest given up; supply is vertical because the central bank sets it. The crossing gives the interest rate.
In practice
Unit twelve built it, and the bond market moves alongside it.
Where people slip
The interest rate is the outcome here, not the thing chosen.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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