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demand for money


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The amount of money people wish to hold, or the function determining this. In Keynesian economics, the main motives for holding money rather than other forms of wealth are the transaction motive (to meet day-to-day needs); the speculative motive (in anticipation of a fall in the price of assets); and the precautionary motive (to meet unexpected future outlays). The main factors that affect demand for money are prices, interest rates, national income, and the pace of financial innovations, as well as expectations concerning inflation.

Subjects: Economics.


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