... coin and note and bank deposits (cheques) which people use to buy goods and services. Its nominal value does not fluctuate and money does not typically pay an explicit rate of interest. The demand for money is the quantity of monetary assets, such as cash and bank and other cheque accounts that people choose to hold in their portfolios. The demand for money will depend on expected return, risk, and liquidity of money and other assets. In practice two features of money are particularly important. First, money is the most liquid asset. This liquidity is the primary benefit of holding money, although alternative assets such as short-term government bonds for instance are no riskier than money and pay a higher return. Secondly, money pays low return. The low return earned by money, relative to other assets, is the major cost of holding money. Public's demand for money is determined by how ...

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