Day: March 4, 2023

9.0 Introduction The expectation of consumers, banks and other businesses have pronounced effects on supply and demand in financial markets. If inflationary expectations increase, the supply of and demand for loanable funds shift, and higher interest rates result. Also bank’s… Read More

8.0 Introduction The IS-LM model is an aggregate demand model which gives best interpretation of Keynesian short-run macroeconomic model. The model takes price level as exogenous variable and shows what determines national income. IS-curve defines equilibrium in the goods market.… Read More

7.1 THE EFFECTS OF A SHIFT INAGGREGATE DEMAND Suppose that for some reason a wave of pessimism suddenly overtakes the economy. The cause might be a government scandal, a crash in the stock market or the outbreak of war overseas.… Read More

6.1 The model of aggregate supply and aggregate demand The amount of output depends on the economy’s ability to supply goods and services, which in turn depends on the supplies of capital and labour and on the available production technology.… Read More

5.0 Introduction The Central Bank of Kenya (CBK), like most other central banks around the world, is entrusted with the responsibility of formulating and implementing monetary policy directed to achieving and maintaining low inflation as one of its two principal… Read More

4.1 Difference between inflation and economic growth Inflation refers to general rise in the level of prices in the economy while economic growth refers to increase in quantity and variety of things available for consumption and is result of the… Read More

3.1 Money demand The demand for money is the desired holding of financial assets in the form of money, that is, cash or bank deposit. It can refer to the demand for money narrowly defined as M1 (non-interest bearing holding)… Read More

2.1 Financial markets Financial market are institutions or arrangements that facilitate the exchange of financial assets, including deposits and loans, corporate stocks and bonds, government bonds, and more exotic instruments such as options and futures contracts. They are mechanism in… Read More

INTRODUCTION Money and banking are two subjects closely intertwined with our daily lives and with the very day functioning of our economy. On atypical day, you encounter money and banks in many firms like from the obvious contact made when… Read More

TOPIC 1: MONEY BANKS – Click to view TOPIC 2: FINANCIAL MARKETS, FINANCIAL INSTITUTIONS AND FINANCIAL INSTRUMENTS – Click to view TOPIC 3: MONEY DEMAND AND SUPPLY – Click to view TOPIC 4: MONEY AND INFLATION – Click to view… Read More