The money market equilibrium is defined as_________

  • A when the demand and supply of money are equal
  • B when demand is greater than supply of money
  • C when demand is less than supply of money
  • D when supply is greater than demand for money
jamb 2019economics

The correct answer is A. when the demand and supply of money are equal

The money market is in equilibrium when the demand & supply of money are equal i.e L = μ

where L = money demand, μ = money supply

Thus μ = LT(γ) + Ls(r)

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