Chapter 34 Journal

This chapter helps us expand on our knowledge of aggregate supply and demand , offering some new theories and explanation for the influence of monetary/fiscal policy on aggregate demand. I haven't yet gotten to the middle of the policy part yet, but I have found some of the early insights in the chapter interesting. With the introduction of the theory of liquidity preference, I have learned to see how interest rates balance the consumer's need for liquid assets (currency) compared to less liquid, more profitable assets such as bonds and stock portfolios. It is quite logical yet cool how the balance is maintained by this interest rate, and that people constantly shift back to equilibrium based on the amount of money they want to be carrying, how much of it they want to be exchanging into different assets, and how the banks react with shifting interest rates I thought that the distinction between the importance of the 3 reasons for the downward sloping demand curve was also interesting. The importance of the interest rate soon became evident to me. Overall, this chapter was a bit harder to comprehend, on a scale of 1-3 I would give this chapter a 2. I have no questions about this chapter.