Money and Banking — full notes
Economics · Macroeconomics - Money and Banking
Money and Banking
1. Meaning and functions of money
Money is anything generally accepted as payment for goods, services, or debts. Functions: medium of exchange, unit of account, store of value, standard of deferred payment.
2. Demand for money
Classical theory - money demanded only for transactions, proportional to income and prices. Keynesian theory - three motives: transactions motive, precautionary motive, speculative motive.