Demand for money is a certain amount of money needed by the public to conduct transactions in trade or for a particular purpose.
Demand for money came from third parties, namely:
a. Of the individuals or consumers
b. The employer or the manufacturer
c. The investor or investors
d. The government (can act as producers, consumers, and regulators).
In the analysis of JM Keynes, the people holding money or request money, to fulfill three wishes, namely:
a. Demand for money for transaction purposes, which means money needed to pay for purchases they would do.
b. Demand for money for the purpose of precaution, it means money as a tool to deal with distress that may arise in the future, because every one can not expect to events that may be applicable in the future.
c. Demand money for speculative purposes, meaning that money used for speculation (speculative). Cash is desired to hold this money because the holder can perform speculation on interest rates to come.
Factors that influence the demand for money are:
a. The desire to hold money or motive of holding money.
b. Level of real income, ie income levels actually received by the community and has accounted for inflation element.
c. Higher interest rates low.
d. The existence of an investment or business development that require funds or money.
e. The price level prevailing in the market.
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