interest-ratesI got a question about the liquidity preference function, hope someone can answer my question
I know If real interest rate is high, people will invest less and save more.
Now the equation liquidity preference function: Md/P = L(i, Y) tell us that increase of i (nominal interest rate) will decrease the demand for real money. It says in the textbook that it’s becasue of the Opp. cost of holding money is buying bond that give interest rate i.
I am confuse because one is saying interest rate go up, people will want to save instead of invest. But the function is saying interest rate go up people will want to invest on bond 19:17:46 is it different because one is real and the other is nominal?
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