Money Demand and Supply

In monetary economics, money demand refers to how much money people want to hold for transactions, savings, or precautionary reasons, influenced by factors like interest rates and income. Money supply, on the other hand, is the total amount of money available in the economy, controlled by central banks through policies like interest rate adjustments and open market operations. When demand for money increases or decreases, it can affect inflation and economic growth. Balancing money supply with money demand helps maintain economic stability and influences overall financial conditions.