Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed.
PART 10 Money and Prices in the Long Run
Chapter 30 of 36 Money Growth and Inflation
Section 5 of 31
…
Secondly we consider money demand.
Fundamentally, the demand for money depends on how much wealth people want to hold in liquid form, as money rather than invested.
…
The quantity of money demanded mainly depends on the interest rate a person could earn, such as from buying an interest-bearing CD, rather than holding more cash or more in a checking account.
Another variable affecting the demand for money is the economy’s price level.
People hold money because it is the medium of exchange.
Unlike other assets, people can use money to buy goods and services.
…
How much money people hold for purchases also depends on the prices of those goods.
The higher prices are
· the more money the average transaction requires
· the more money people will hold in their wallets and checking accounts
So, a higher price level ( = a lower value of money) increases the quantity of money demanded.
…
demand for money increases
okane no juyō ga fueru
お金の需要が増える

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