"Modeling Money" Coursework Example | Topics and Well Written Essays - 250 words

manikin Money - Coursework ExampleAlso, it is unlike liquidity preference model that assumes all economic factors are continual hence the consumers decision to hold cash is dependent on supply and demand.Second decimal easing (QE2) was a strategic government policy aimed at reducing the mortgage rate and treasury yields, as well as increase economic stimulus through the large-scale purchase of assets. It conduct to the decline of yields on longer-maturity Treasuries and other securities following the Federal announcement of its intention to increase its holding of longer-term securities (Christensen & Gillan, 2014). This whitethorn have been caused by expectations of a decline in stake premiums for longer-term debt securities. Also, the strategy may have had interim effects of increasing market liquidity and lowering liquidity premiums for long-term investments. QE2 conforms to the liquidity preference supposition that presume investors have a preference for premium for secur ities with longer maturity bearing the greater risk while they have a preference for holding cash since it involves minimal risk.Christensen, J. H. E. & Gillan, J. M. (July 2014). FEDERAL RESERVE depose OF SAN FRANCISCO WORKING PAPER SERIES Does Quantitative Easing Affect Market Liquidity? Retrieved on eleventh 2015 from