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Understanding Demonetization in India by Shrawan Kumar Singh

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CHAPTER 3

Demand for Money

The demand for money comes from the desire to hold liquid assets, of which money is the only perfect example. It may be noted that money is not demanded for its own sake but because it can be used to purchase economic goods and avail needed services. The behavior of individuals and businesses is important in deciding the level of money balances they wish to hold to understand the demand for money. The demand for money is a key variable to explain links among money, the financial system, output, and prices.

Concept of Demand for Money

In economics, the demand for money is the desired holding of financial assets in the form of money: that is, cash or bank deposits rather than investments. Money is not desired for its ...

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