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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.
Macro-economic policy objectives The major macro-economic policy objectives which the governments strive to achieve are: i. Full employment One of the main objectives
Individual and market demand schedule The plan of the possible quantities that will be demanded at different prices by an individual is called Individual demand schedule. Su
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Real and nominal wages Wages are wanted only for what they will buy, real wages being wages in terms of the goods and services that can be bought with them. Nominal wages
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Open Market Operations The Central Bank holds government securities. It can sell some of these, or buy more, on the open market, buying or selling through a stock exchange or
Borrowing Facilities If a country's currency is not convertible, it can borrow from countries whose currencies are convertible and use the convertible currencies to make its i
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