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Question on any change of the usual stock of cash.
As a rule, changes in circumstances or assumptions generate
Some reshuffle it a cash in hands of separate persons, as on
Business these changes make various impact on different people - partly
In view of distinction of environment in which they act, and motives, for the sake of which they
Keep cash, and partly in view of unequal awareness and
Different interpretation of a new situation. Therefore new equilibrium level of norm
Percent it is interfaced to redistribution it money. Nevertheless
Change of norm of percent, instead of cash redistribution - that moment,
Which deserves our main attention. Cash redistribution
Really essential phenomenon is connected with individual distinctions, but
Occurs in the elementary case. Furthermore and generally norm shift
Percent acts usually as the most remarkable result of reaction on
Occurrence of the new data. Price range on the bond occurs, as usually
Write in newspapers, "out of any communication with activity of market bargains". So it and
Should be if to take into consideration that individual reactions to news
Have among themselves much more similarity, than distinctions.
II
Though the sum of cash which the separate persons decide to adhere, having
In a kind the commercial motive or motive of precaution, also is not
Absolutely independent of that is kept on a speculative motive, all
It is as a first approximation expedient to consider the sizes of these of two
Categories it a cash as not dependent basically one from other.
Therefore for the further analysis we can dismember accordingly
Our problem.
Precautions, are M1, and the size of a cash answering to the speculative
To motive, is M2. According to these two divisions of cash we
Let's receive two functions of liquidity-L1 and L2. L1 depends mainly from
Bond yield, whereas L2 - mainly from a certain parity
Between current norm of percent and a waiting condition. So:
M = M1 + M2 = L1 (y) + L2 (i),
Where L1 - function of liquidity with Y as the argument, defining
Size M1, and L2 - function of liquidity from norm of percent r, defining
Size M2. Necessity of consideration of three questions From here follows:
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