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  1. The Supply of Money
  2. The Demand for Money
  3. The Value of Money and the Price Level
  4. The Price Indice
  5. The Quantity Theory of Money


The Supply of Money

The supply of money implies that entire stock of money in an economy and it consists of the bank notes, coins and bank deposits. It is important to note that the above definition of money supply is like that because of the existence of other assets that can be converted to cash. These are called “near monies” since they can converted into currency as well even though at a cost.

The Demand for Money

The demand for money means the desire to hold money in liquid or cash form as against spending the money. It is also the desire for money to serve as a medium of exchange and simultaneously serve as a store of value.

Reasons and Motives Why People Demand for Money

  1. The transaction motive: It is the desire to hold money for the everyday transactions that take place such as paying transport fares and purchasing food items.

Lesson tags: Economics Lesson Notes, Economics Objective Questions, SS2 Economics, SS2 Economics Evaluation Questions, SS2 Economics Evaluation Questions Third Term, SS2 Economics Objective Questions, SS2 Economics Objective Questions Third Term, SS2 Economics Third Term
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