demand for money
demand for moneyThe amount of money people wish to hold, or the function determining this. Some economists have referred to the demand for transactions, speculative, and precautionary balances, but money held for one purpose can always be used for another, so it seems more sensible to think in terms of different motives affecting the amount of money holdings people want. The transactions motive means that, because money is used in most transactions, individual money holdings are an increasing function of incomes, and business holdings are an increasing function of turnover. At any given level of real activity, money holdings at any given interest rate and expected rate of inflation are proportional to the price level. Because money is one way of holding assets, the amount demanded is also an increasing function of total net assets. The demand for money, or liquidity preference, is widely held to be a decreasing function of both interest rates and the expected...
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