Money: Demand for and supply of money

Economics SSS 2 Third Term


Money: Demand for and supply of money

Performance Objectives

Student should be able to:

  1. Identify various reasons for holding money.
  2. Identify the determinants of the money supply.
  3. Explain how changes in the price level affect the purchasing power of money.


Demand for money

The demand for money is the total amount of money which all individuals in the economy wish for various reasons to hold. Alternatively, the demands for money refers to the desire to hold money i.e. keep ones resources in liquid form rather than spending it.

Reasons or motives for holding money

There are three motives for the demand for money or to hold money. These are:

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