money demand

Money demand refers to the desire of individuals and businesses to hold onto liquid assets, like cash or easily accessible bank deposits, instead of other forms of wealth. People demand money for transactions (daily purchases), to save for future needs (precautionary motives), and for investment opportunities (speculative motives). Various factors influence this demand, including income levels, interest rates, inflation, and economic stability. Essentially, understanding money demand helps explain how people manage their finances and make choices about spending, saving, and investing in different economic conditions.