The understanding of monetary equilibrium in monetary equilibrium

Monetary equilibrium is the equilibrium of money supply and demand, which refers to the state in which the demand for money and the supply of money in a certain period of economic operation are dynamically consistent, and the equilibrium is used to explain the relationship between the supply of money and the demand for money, and the supply of money meets the demand for money in economic life to achieve equilibrium.

Monetary equilibrium is a state in which the supply and demand of money are roughly the same, rather than the exact equality of the value of the supply and demand for money.

Monetary equilibrium is a dynamic process in which money supply and demand may be inconsistent in the short run but broadly consistent in the long run.

Monetary equilibrium is not the money supply.

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Summary. Therefore, there is an inverse relationship between interest rates and money demand. When there is an equilibrium interest rate level in the money market, the money supply is equal to the demand for money, and the equilibrium state of money is achieved.

Therefore, there is no change in the relationship between interest rates and money demand on the opposite side. When there is an equilibrium interest rate level in the money market, the money supply and the demand for money are equal, and the equilibrium state of money and silver potato dates can be realized.

The relationship between equilibrium and interest rates.

The relationship between monetary equilibrium and market equilibrium is now revised: Aggregate supply determines money demand Money demand leads to money supply Money supply becomes the carrier of aggregate demand, and the large and small aggregate demand will have a huge impact on the aggregate supply The large and small aggregate demand can also be adjusted through the policy of tightening or expansion, but it is difficult to ensure the realization of the goal of equalizing the balance by simply controlling demand. If MS, MD, AS, and AD represent the supply and demand of money and the supply and demand of the market respectively, their relationship can be expressed as the interaction between them is reciprocal, and the arrow only indicates the direction in which it dominates.

Monetary equilibrium is closely related to market equilibrium, and monetary equilibrium contributes to the realization of market equilibrium. However, the balance of money does not necessarily mean that the market is in balance.

The reasons are:1Market demand is based on money, but not all money supply constitutes market demand.

Money supply = actual circulating money + actual non-circulating currency market demand = actual circulating currency Money circulation velocity 2The market has a wide supply of orange and requires money to be realized, or to make it clear, so it puts forward the demand for money by dismantling fibers. But this is not the whole story of the demand for money.

The market supplies the currency velocity = the demand for the real currency in circulation, the demand for the real currency in circulation = the demand for the real currency in circulation + the demand for the real non-circulating currency.

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What are the equilibrium conditions in the currency market? How is the LM curve trapped? Please draw a diagram to illustrate.

Answer: (1) The so-called money market equilibrium refers to the state when the money supply and the demand for money are equal. Assuming that M represents the real money supply, M represents the nominal money supply, and P represents the price level, the equilibrium conditions for the money market are:

Derive the expression of the LM curve:

The LM curve with Y as the horizontal axis and R as the vertical axis is sloping from the bottom left to the top right.

From this equation, it can be seen that when m is a certain amount, when it increases, it must decrease, otherwise the equilibrium of the money market cannot be maintained.

It is the trading demand for money (caused by the motivation to trade and the motivation to prevent) that increases with income.

It is the speculative demand for money, which decreases as interest rates rise. Therefore, when the demand for money transactions increases due to the easing of national disparities, the increase in people's incomes must increase the interest rate accordingly, so as to reduce the demand for currency speculation in order to maintain the equilibrium of the money market. Conversely, when income falls, interest rates must fall, otherwise the money market cannot remain in equilibrium.

The LM curve pushes Wang Qing Dadao process to see the figure The curve is actually from the relationship between the speculative demand of money and the interest rate.

It is derived from the relationship between the transaction demand and income of the currency and the relationship between the demand for money and the supply. This derivation process is also commonly used by Western scholars to illustrate the following diagram 3-9, which contains four quadrants.

The curve sloping to the lower right in quadrant (1) is the speculative demand function for money.

Quadrant (2) indicates how to divide the money used for trading demand and the money for speculation when the money supply is a certain quantity. Because. So. Or.

The straight line at an angle of 45° to both the vertical and horizontal axes indicates this relationship.

The curve of quadrant (3) is the trading demand function of the currency.

y)。Quadrant (4) represents a series of combinations of interest and income that align with money market equilibrium. It contains the content of the above three quadrants. In this way, a series of interest rate and income combinations that equilibrium money are linked together to create an LM curve.

First, the balance of payments remained basically balanced, and foreign exchange reserves rose steadily. In the first half of the year, China's current account surplus was 76.5 billion US dollars, and the ratio of gross domestic product (GDP) continued to be in a reasonable equilibrium range.

Second, the RMB exchange rate has become more flexible, and its performance among the world's major currencies has been stable. Since the beginning of this year, the RMB exchange rate has risen and fallen, showing two-way fluctuations, maintaining a high degree of flexibility. The average 1-year implied volatility in the domestic options market is within a reasonable and moderate range of fluctuations between the highest and lowest prices.

In the first three quarters, the spot exchange rate (CNY) of RMB against the US dollar rose slightly.

Third, market behavior is more rational, and market expectations remain stable. From the perspective of foreign exchange settlement and sales, since the beginning of this year, market players have maintained the trading mode of "settling foreign exchange at high prices and purchasing foreign exchange at low prices", which shows that market players are more rational and their awareness of controlling exchange rate risks has been continuously enhanced. From the perspective of relevant indicators such as forwards and options in the foreign exchange market, the exchange rate expectation has also remained generally stable, and there is no consistent unilateral exchange rate expectation.

Fourth, cross-border two-way investment is still active, and cross-border capital flows are stable and orderly. On the one hand, foreign investors have maintained a high level of enthusiasm for domestic investment. According to the statistics of the Ministry of Commerce, in the first three quarters, the foreign direct investment of China's non-financial enterprises was 103.3 billion US dollars, a year-on-year increase; Statistics from the foreign exchange bureau show.

(1) Market intervention and effective regulation of banks.

2) The state fiscal revenue and expenditure.

3) Whether the structure of the production department is reasonable.

4) Whether the balance of payments is basically balanced.

The equilibrium of money supply and demand refers to the state in which the demand for money and the supply of money are dynamically consistent in the operation of the economy in a certain period.

1) The realization of monetary equilibrium under the conditions of market economy depends on three conditions, namely, a sound interest rate mechanism, a developed financial market and an effective bank regulation mechanism.

2) Under the conditions of a complete market economy, the most important mechanism for achieving monetary equilibrium is the interest rate mechanism. In addition to the interest rate mechanism, there are: ** the regulatory means of the bank; state fiscal revenue and expenditure; whether the structure of the production sector is reasonable; and whether the balance of payments is basically balanced.

3) Under the conditions of market economy, the interest rate is not only an important signal of whether the supply and demand of money are balanced, but also has an obvious adjustment function for the supply and demand of money. Thus, monetary equilibrium can be achieved through the action of the interest rate mechanism.

Hello, I am glad to answer for you, the relationship between monetary equilibrium and market equilibrium is as follows: Aggregate supply determines money demand Money demand leads to money supply Money supply becomes the carrier of aggregate demand, and the large or small aggregate demand will have a huge impact on the aggregate supply The large and small aggregate demand can also be adjusted through tightening or expansionary policies, but it is difficult to ensure the realization of the goal of equilibrium simply by controlling demand.

In addition to the role of the interest rate mechanism, the realization of monetary equilibrium also has the following influencing factors:

**Market intervention and effective regulation of banks.

The state's fiscal revenue and expenditure should be basically balanced.

The structure of the production sector should be basically rational.

The balance of payments must remain in basic balance.