A Simple Classroom Experiment on Money Demand

Abstract

This simple classroom experiment is designed to help students to better understand the concept and the theory of money demand. By simulating what households face in real life, the experiment allows students to reflect on the cost and benefit of holding money and understand how money demand is affected by various factors. The experiment is suitable for an undergraduate macroeconomics course at the introductory or intermediate level. The paper also presents evidence of student learning resulting from the experiment, controlling for student characteristics.