what are the four factors that affect demand for money?

Question

full answer please

Answer 1

First, you must define your terms. "Money" is simply the most marketable good in a given area. Originally, all money must arise from a commodity. In order to overcome the double-coincidence of wants problem is a simple barter economy, people tend to exchange their goods and services for another good which they have no need for, but which is more readily exchanged for goods and services they do want. For example, a fisherman who wishes to purchase bread (but the only baker doesn't want fish, but does want eggs) may exchange his fish for eggs, and then exchange those eggs for bread. (Note this money comes about with absolutely no intervention by a government source.)

As economies grow, the most marketable good becomes the money of the economy. When economies touch, the most marketable good between them tends to become the universal currency. In this way the demand for the item used as money does increase somewhat. However, note that the item used as currency MUST have some sort of value. Only a fool would accept, for example, a piece of paper (low value) for an object of high value, no matter how many zeroes were written on the paper. (10; 100; 1000; 10000, etc.) So really, there are only two factors which affect demand for money: the demand for the commodity itself, either as a consumer good or a producer good; and the demand for the commodity as a medium of exchange.

One thing to note, however: unlike all other goods, more money is not preferred to less. People don't want money. They want goods and services.

Answer 2

you need to specify under what model. Classical? Keynesian? Monetarist?