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Demand and Supply of Money:
Demand of Money:
The overall wealth owned by the home and businesses is referred to as the demand for money. A number of variables, including income levels, interest rates, price levels (inflation), and uncertainty, have an impact on the demand for money.
Transactions: This sum of money is required to complete transactions. An economy's need for money for transactions rises along with both the overall volume and quantity of transactions.
Precautionary: To be safe, you should set aside this amount of money for future requirements that are unclear, including unforeseen medical costs. As the economy gets bigger, there is a greater need for money for protection.
Speculative: People also keep money on hand in order to take advantage of potential investment possibilities in the future. People would choose to invest than hard money with a speculative intent if the existing returns on financial goods were high.
Supply of Money:
The central bank of a country, such as the US Fed, regulates the amount of money available in that country's economy. The Federal Reserve may alter reserve requirements or use open market operations to alter the money supply.
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