Demand for Money
Definition
The demand for money refers to the desire of individuals and businesses to hold cash or liquid assets for transactions and precautionary purposes.
Analogy
Think of the demand for money like having a wallet. Just as you keep some cash in your wallet for everyday expenses and emergencies, individuals and businesses have a demand for money to meet their day-to-day needs and unexpected expenses.
Related terms
Money Supply: The total amount of money available in an economy at a given time.
Liquidity Preference: The preference of individuals to hold their wealth in liquid form (cash) rather than in other assets.
Transaction Demand: The demand for money to facilitate daily transactions such as buying goods and services.
"Demand for Money" appears in:
Study guides (1)
Resources
© 2024 Fiveable Inc. All rights reserved.
AP® and SAT® are trademarks registered by the College Board, which is not affiliated with, and does not endorse this website.