What is demand for money, Macroeconomics

Assignment Help:

Q. What is Demand for money?

Demand for money

The demand for money depends negatively on R and positively on the Yin the IS-LM model

As for any type of goods, there is a demand for money and a supply of money. Remember that demand for an arbitrary good is the amount an individual wants to purchase (and pay for with money) under numerous conditions. Demand for an arbitrary good is always associated to money. Though the demand for money can't relate to money itself - how much money we want to 'buy' with money becomes a pretty useless definition. 

Instead, we define demand for money as the amount out of your wealth that you wish to hold as money. We use the symbol MD to demand for money. In IS-LM model, there is just one alternative to money and that's bonds. 

If your total wealth is 1.000 euro and you want to keep 100 euro in cash or in an account connected to a credit or debit card and the rest in government bonds then your demand for money is indeed 100 euro. It's the amount which you want to have easily accessible for immediate payments. It is noteworthy that having a low demand for money doesn't mean that you don't want money. In its place, it means that you prefer to hold most of your wealth in other sorts of assets.


Related Discussions:- What is demand for money

Four different measures of GDP, Four different measures of GDP Using ci...

Four different measures of GDP Using circular flow model we see that there are 4 equivalent ways of measuring GDP:  Using the definition: market value of all finished goo

• What are the main goods and services the United States tra, I am working ...

I am working on a project for my class and this week discussion is on international trade and exports. what I am needing is the information for the 1970s

Outline each approach as positives and negatives, In a group environment, s...

In a group environment, should leaders be assigned at the beginning of a project or should leaders emerge as the group is working on the project? Outline the positives and negative

Difference among federal income tax and a federal sales, How could utility ...

How could utility theory help us understand the difference between a federal income tax and a federal sales tax on consumer consumption patterns?

Help, i want an answer for my q Question 3 (5 marks) Most studies of firm...

i want an answer for my q Question 3 (5 marks) Most studies of firms’ long run costs have found that average costs decline as firms produce increasingly larger output levels (eco

Multiplier concept, Ask question difference between static multiplier and d...

Ask question difference between static multiplier and dyanamic multiplier

Gdp, The following is the information from the national income accounts for...

The following is the information from the national income accounts for a hypothetical country: GDP Rs. 6000.00 Gross Investment Rs. 800.00 Net Investment Rs. 200.00 Consumption Rs.

Find real interest rate and nominal interest rate, #questionAssume that an ...

#questionAssume that an economy''s GDP Y=5000. Also assume that the government runs a deficit where tax revenue T=1000 and government expendituresG= 1500. The consumption function

Economic analysis and typical managerial decisions, ECONOMIC ANALYSIS AND T...

ECONOMIC ANALYSIS AND TYPICAL MANAGERIAL DECISIONS Despite the differences between microeconomic analysis and macroeconomic analysis, there is considerable overlapping and inte

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd