Demand for money, Managerial Economics

Assignment Help:

Demand for money 

The demand for money is a more difficult concept than the demand for goods and services.  It refers to the desire to hold one's assets as money rather than as income-earning assets (or stocks).

Holding money therefore involves a loss of the interest it might otherwise have earned.  There are two schools of thought to explain the demand for money, namely the Keynesian Theory and the Monetarist Theory.

The demand for money and saving

The demand for money and saving are quite different things.  Saving is simply that part of income which is not spent.  It adds to a person's wealth.  Liquidity preference is concerned with the form in which that wealth is held.  The motives for liquidity preference explain why there is desire to hold some wealth in the form of cash rather than in goods affording utility or in securities. 


Related Discussions:- Demand for money

Real rigidities in the goods market, Real Rigidities in the Goods Market  ...

Real Rigidities in the Goods Market   The most important factor associated with real rigidity in  the goods market  is the existence of  imperfect  competition.  Imperfect comp

Explain about linear isoquant, Q. Explain about Linear Isoquant? : In...

Q. Explain about Linear Isoquant? : In this case, isoquant would be straight lines as in Figure below. This type presumes perfect substitutability of factors of production. I

Monetary policy, Monetary policy The problems concerning the abili...

Monetary policy The problems concerning the ability of monetary policy to influence the economy, as for instance the doubts about the ability of lower interest rates to st

The central bank, The Central Bank These are usually owned and operate...

The Central Bank These are usually owned and operated by governments and their functions are: i.      Government's banker :  Government's need to hold their funds in an ac

Central bank functions-controller of credit, Controller of Credit The p...

Controller of Credit The principles of credit control by the central bank were discovered and enunciated after the publication of Bagehot Lombard street in 1873. Even after 187

Demerits of direct taxes, Demerits of direct taxes a. Heavy direct tax...

Demerits of direct taxes a. Heavy direct taxation, especially when closely linked to current earnings, can act as a serious check to productivity by encouraging absenteeism

What is the maximum possible output, If the marginal product of L is MPL = ...

If the marginal product of L is MPL = 10K - L and the marginal product of K is MPK = 10L - K, then what is the maximum possible output when the total amount that can be spent on K

Apprehensions about the future price of law of demand, Apprehensions about ...

Apprehensions about the future price of law of demand When consumers anticipate a constant rise in the price of a long-lasting commodity, they buy more of it despite the price

BREAK EVEN ANALYSIS, WRITE A NOTE ON BREAK -EVEN ANALYSIS IN PROFIT MANAGEM...

WRITE A NOTE ON BREAK -EVEN ANALYSIS IN PROFIT MANAGEMENT

Proportion of income spent on a commodity, Q. Proportion of Income Spent on...

Q. Proportion of Income Spent on a Commodity? Another characteristic that has an impact on the elasticity of demand for a commodity is proportion of income that consumers use u

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd