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Macroeconomics

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The Keynesian Demand for Money

MACRO-CMBLQI

The following phrase describes the components of the demand for money proposed by John Maynard Keynes. Fill in the blanks with the correct phrases or terms.

According to Keynes, there are three motives behind people’s choice to hold money (i.e. coins, notes, and demand deposits). Money needs to be conveniently available to make

such as purchasing groceries and other consumption needs. Furthermore, people have a desire to hold money to accommodate

such as medical or car repair bills. Finally, people may desire to hold money, despite the opportunity costs associated with not investing in assets such as bonds, in order to be able to seize better

that could arise in the future. Respectively then, the demand for money is a function of the

,

, and

demands of people.