Answer to Question #141985 in Macroeconomics for edd

Question

we discussed a simple economy with three person each producing one unit of
a product. In that economy, suppose payment technology is instant in the purchase of coffee, but the money transfer takes x days in the purchase of apples and 2x days in the purchase of tea where x ≥ 1. Assume
price level is Po. Then, what is the nominal money demand and real money demand in the economy?

Answer 1

In this situation the nominal money demand will be lower than real money demand in the economy, because of such time lag.