What is the asset demand for money?
Understand the Problem
The question is asking for an explanation of the concept of asset demand for money, which relates to how individuals hold money as a form of savings or investment rather than for transactions. This involves understanding economic principles concerning liquidity and asset allocation.
Answer
The demand for money to buy assets like bonds and gold, inversely related to the interest rate.
The asset demand for money refers to the demand for money to buy assets like bonds, equity shares, preference shares, debentures, gold, and other financial instruments. It is inversely related to the interest rate.
Answer for screen readers
The asset demand for money refers to the demand for money to buy assets like bonds, equity shares, preference shares, debentures, gold, and other financial instruments. It is inversely related to the interest rate.
More Information
Asset demand for money is a concept from macroeconomics that details why people hold money as opposed to other assets, highlighting the liquidity aspect and the inverse relationship with interest rates.
Tips
A common mistake is to confuse asset demand with transaction demand for money, which refers to money held for everyday transactions.
Sources
- Explain the difference between the transaction demand for money and the asset demand for money - homework.study.com
- Mr. Mayer AP Macroeconomics - burbankusd.org
- Speculative demand for money - Wikipedia - en.wikipedia.org
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