What are the motivations for people to hold money?

The motivations of people to hold money include trading motives, prevention motives, and speculative motives.

Keynes. The current dynamic preference theory analyzes three motivations for people to hold money, namely the trading motive, the precautionary motive, and the speculative motive. The demand for money in the first two motives is the demand for the medium of exchange.

The latter is motivated by the demand for money is the demand for idle money balances and the demand for the form of assets. Keynes believed that the demand for money in a transactional nature is an increasing function of income.

Speculative demand for money, on the other hand, is a function of the decline in interest rates.

The motivations of people to hold money include trading motives, prevention motives, and speculative motives.

Keynes's liquidity preference theory analyzes the three main motivations of people to hold money: the trading motive, the precautionary motive, and the speculative motive. The first two motives for the need for money are the demand for the medium of exchange.

The latter motive of money demand is the demand for idle money balances, the demand for the form of assets, Keynes believed that the transactional demand for money is the increase function of income, while the speculative demand for money is the subtraction of interest rates.

Keynes. It is believed that there are three types of motives for people to hold money: trading motives, prevention motives, and speculative motives.

There are three motives for people's need for money, including the motive of trading, in order to pay for everyday transactions, people must hold money; The precautionary motive, also known as the prudence motive, is the holding of money to cover some unexpected emergency payments; speculative motives, due to the future interest rate.

People hold money in order to avoid capital losses or increase capital gains, and to adjust the asset structure in a timely manner. Among the three motives of money demand, the money demand generated by the transaction motive and the prudential motive are all related to the transaction of goods and services, so it is called the gross money demand of the transaction. The demand for money generated by speculative motives is mainly used in financial markets.

speculation, hence the name speculative money demand.

Money is the medium for purchasing goods and preserving wealth, and the contract between the owner of property and the market on the right of exchange is an agreement between the owner, reflecting the economic cooperation between the individual and the society. The contractual nature of money dictates that it can take different forms, such as general equivalents.

Currency, banknotes, electronic money.

Wait. The advent of money greatly expanded the scope of specialization and division of labor, infinitely expanded the market for all products, and made a civilized and productive society possible. The advent of money not only eliminated the problem of coincidence of demand and the inseparability of goods, but also allowed individuals to extend the stage of production indefinitely and produce the goods they needed.

Complex and high stages of production are possible, and specialization can permeate every link of a production process and the type of goods produced.

Since money is a commodity, it has a use value like all commodities.

and exchange value. When we are in different forms of value movement, money plays different roles, including the scale of value, the means of circulation, the means of payment, the means of storage, and the world currency.

Among them, the measure of value and the means of circulation are the basic functions of money. The other three functions are derived from both. Money is a general equivalent when it functions a variety of functions.

Keynes. It is believed that people's monetary demand behavior is determined by three motives: trading motives, preventive motives and speculative motives.

1. Trading motivation refers to the motivation that people need to hold money in order to cope with daily commodity transactions. He divided the transaction motive into two types: the income motive and the business motive. The motivation for income mainly refers to the individual, and the motivation for business mainly refers to the enterprise.

The demand for money based on the motivation of income and the motivation of business is what Keynes called the demand for money transactions.

2. Prevention motivation, there are often some unexpected, uncertain spending and shopping opportunities in life. People also need to keep a certain amount of money in their hands, this kind of currency.

Demand can be referred to as the precautionary demand for money.

3. Speculative motivation refers to the motivation that people need to hold currency in order to satisfy the profit from speculation according to the change of market interest rate. Currency has liquidity flexibility, and holding it allows financial speculation at any time according to changes in the market**. The demand for money that arises out of this motive is called the speculative demand for money.

Extended Material: What are the factors that affect the demand for money?

1. Income: in the market economy.

The income of each microeconomic agent is initially obtained in the form of money, and its expenditure is also paid in money. Generally speaking, higher incomes indicate that the wealth of the society increases, and the expenditure will expand accordingly, so that a larger amount of money is needed to meet the commodity trade.

2. **: In essence, the demand for money is that people engage in economic activities at a certain level.

The amount of currency required.

Under the condition that the quantity of goods and services is given, the higher the demand, the demand for money for the transaction of goods and services will inevitably increase. Therefore, there is a same-direction movement relationship between ** and currency demand, especially the demand for trading currencies.

3. Interest rate: Because the level of interest rate determines the opportunity cost of people's currency holding.

The higher the interest rate, the greater the cost of holding currency, and people are unwilling to hold currency and are willing to buy interest-bearing assets to obtain high interest income, so the demand for money of the human race will decrease; The lower the interest rate, the smaller the cost of holding currency, and the lower the desire to buy interest-bearing assets, the demand for money will increase.

4. Currency circulation velocity: Currency circulation velocity refers to the number of times currency changes hands in a certain period of time. Dynamically, the total demand for money in a given period is the total flow of money, and the total flow of money is the product of the average stock and velocity of money.

5. Financial assets.

Choice: There is an alternative between various financial assets and the demand for money. So the rate of return on each financial asset.

Security, liquidity, and the public's choice of asset diversification all play a role in increasing or decreasing the demand for money.

6. Other factors: such as changes in the system, expected changes in profits and profits, changes in monetary demand caused by fiscal revenues and expenditures, credit development status, financial service technology and level, and even national characteristics and living habits all affect China's monetary demand.

Transaction motives (daily regrets often trade rolling fingers).

Speculative motivation (profit based on changes in the Libi liquid preparation rate).

Cautionary motivation (need for prevention).

What is the demand for money

The demand for money refers to people's desire to keep a certain amount of money at hand, which is caused by people's liquidity preference for money, so the demand for money is also known as liquidity preference.

The motive of the need for money

There are three main motives for generating radical flow and Zen goodness: one is the trading motive, the second is the prevention motive, and the third is the speculative motive.

1) Transaction motivation refers to the motivation of people to keep money at hand in order to cope with daily transactions, and the resulting demand for money is called the transaction demand for money. Generally speaking, as national income increases, the amount of money used for trading needs increases.

2) The precautionary motive, also known as the prudential motive, refers to the motive of people to keep money at hand in order to prevent unexpected situations from happening, and the resulting demand for money is called the precautionary demand for money. Generally speaking, given the given attitude towards risk, the more income there is, the greater the amount of money that will be kept at hand for the purpose of precaution.

3) Speculative motivation refers to the desire of people to keep a certain amount of money on hand in order to grasp favorable interest-bearing assets, and the resulting demand for money is called speculative demand for money.

Because money is an intermediate in the exchange of goods, people all over the world. Regardless of the status of the people, the more than 7 billion people in the world must buy food and daily necessities, etc., and the group must have currency. That's a big part of the demand motivation.

Entrepreneurs, on the other hand, need money to maintain production and expand reproduction, and they need money to buy raw materials, pay wages, pay electricity bills, etc. To expand reproduction, it is necessary to demand more money to build factories, buy equipment, and recruit troops, all of which are the motives of demand, and the amount of money required is huge. The weight is measured in trillions of yuan.

For example, China's total investment in fixed assets will exceed 50 trillion yuan a year. Ten years of accumulation, it will take more than 500 trillion yuan.

The first is the demand for currency transactions, which refers to the demand for currency formed by households or manufacturers for the purpose of trading. It arises from the asynchronous nature of people's income and expenditure. If income and spending time are perfectly synchronized, there is no need to have idle currency on hand.

For example, people's monetary income is often obtained on a monthly, quarterly, or even annual basis, but the expenditure is constantly and continuously, which creates a demand for currency transactions.

The second is the precautionary demand for money, which refers to the demand for money formed by people to cope with accidents, which arises from the uncertainty of future income and expenditure. For example, people need to keep some money with them to cope with illness, work accidents, and other unforeseen events. The third is speculative demand, which refers to the demand for money formed by people's timely adjustment of asset structure in order to avoid asset losses or increase capital income due to the uncertainty of future interest rates.

For example, when people expect bonds** to rise, they need to buy bonds in time to make a profit when they sell them later, which creates speculative demand for money.

Answer]: There are three motivations for people to hold money, namely the trading motive, the prevention motive, and the speculative motive. The monetary demand for trading motivation refers to the balance of money that people hold for the purpose of trading.

The reason why people have to hold a certain balance of money for the purpose of trading is that businesses and individuals must have expenses before they can get enough income, and people often do not have an accurate grasp of the time and amount of income in hand, so they have to hold some currency to make up for certain periods of spending more than they receive. The monetary demand of transaction motivation can be divided into two parts: the monetary demand of personal consumption motivation and the monetary demand of enterprise business motivation. The monetary demand for personal consumption motivation is due to the inconsistency of personal income and expenditure in time and amount, and a certain amount of money needs to be maintained to meet the needs of household consumption; The monetary demand for the business motive of the enterprise is due to the difference in time and amount between the sales revenue and various expenditures of the enterprise, and a certain amount of currency needs to be maintained in order to maintain the normal operation of the enterprise.

The monetary demand for the precautionary motive refers to the fact that people hold a monetary balance in order to cope with unexpected events. The precautionary motive for money comes from uncertainty in the economic system. For families, individuals and enterprises in difficulty, even if they can fully grasp the time and amount of income and expenditure, the situation of spending more than income often occurs, because many unexpected expenditures are unpredictable.

For example, illness or injury of family members, natural disasters, unsalable enterprise products, etc. The speculative demand for money refers to the balance of money that people hold as an asset for investment (or speculative) activities. The reason why people want to hold more currencies for investment (or speculation) is because currencies are the most liquid assets.