Money Demand & Supply

Money demand refers to how much money people and businesses want to hold for transactions, savings, and precautionary reasons. It increases when people are uncertain or need to buy more goods and services. Money supply, on the other hand, is how much money is available in the economy, controlled by central banks through policies like interest rates. When the demand for money exceeds its supply, it can lead to inflation, while an excess of money can lead to deflation if demand is low. Balancing these is essential for economic stability and growth.