demand for money

Demand for money refers to the desire and need for liquid cash or easily accessible funds within an economy. People hold money for three main reasons: to facilitate everyday transactions (transactional motive), to save for future needs or emergencies (precautionary motive), and to invest or take advantage of opportunities (speculative motive). The amount of money people want to hold can fluctuate based on factors like interest rates, inflation, and economic conditions. Understanding this demand helps economists and policymakers shape effective monetary policies that influence economic stability and growth.