KEY TERMS

currency, p. 278 M1, p. 281 real balances, p. 295

demand for money, p. 292 M2, p. 283 risk, p. 285

diversification, p. 291 medium of exchange, p. 279 risk premium, p. 285

expectations theory of the term monetary aggregates, p.

^structure, ^p. ²⁸⁶ money, p. 277 term premium, p. 286

^{expected returns, p. 285} money demand function, p. 295 time to maturity, p. 285

in^{come elasticity of money} money supply, p. 283 unit of account, p. 279

demand, p. 298

open-market operations, p. 284 velocity, p. 299

interest elasticity of money _z _.,..

portfolio allocation decision, p. 284

demand, p. 298

_{liquidity, p. 285} quantity theory of money, p. 300

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