Define Money Demand

Question

Define Money Demand

Examlex · Accepted Answer

The Answer is Money demand is defined as a relationship between the interest rate and the amount of money that people want to hold at any given interest rate.The money demand curve is downward sloping, reflecting the opportunity cost of holding money, or the interest rates on the alternatives to holding money minus the interest paid on current accounts.When the interest rates on the alternatives to holding money rise, the opportunity cost increases and the quantity of money demanded falls.When the interest rates on the alternatives fall, the opportunity cost decreases and the quantity of money demanded rises.

Define Money Demand

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