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5 January, 13:22

Identify and explain the two determinants of "Money Demand"

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  1. 5 January, 16:14
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    Answer: Sum of transactions and asset demand for money

    Explanation:

    Demand for money means the quantity of money that people want to hold while the quantity of money is available to them based on the economic situation. The transactions which the people are willing to make is a determinant to money demand. Transactions such as paying rent, buying groceries, making repair etc. holding on a part of transactions to pay for future transactions is the demand for money.

    Some hold back money for the purpose of speculative increase of the value. When the interest rates of investing in assets is more that grows the value of the money held. This demand is the asset demand for money.
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