Transactions demand and precaution­ary demand vary directly with the first two factors but speculative demand for money vary inversely with the market rate of interest. Favorite Answer. 2. Is it normal to have the medicine come out your nose after a tonsillectomy? 4 … If other assets available for holding are highly illiquid and risky, the demand for money is likely to be high; The material on this site can not be reproduced, distributed, transmitted, cached or otherwise used, except with prior written permission of Multiply. 4: The power of money, and … Abstract -This study tries to find out factors affecting demand for money by empirical testing. The system of payments in the community: The demand for money is affected by the frequency, regularity and correspondence between the time and amounts of money receipts and disbursements. It should be noted that it might not happen, if other things do not remain constant. The ease and certainty of securing credit: People like to hold larger money balances if the credit is not available easily or when its availability is uncertain. In your dicussion, explain why a hospital 's When prices go up because wages are high and materials are scarce, it takes more money to buy goods. These are known as Demand functions. Political factors are one of the main factors that influence the demand and supply of currency. 01. Importance of money demand volatility for monetary policy. Open Market Operations. We have four main factors that affect consumer behaviour they are; Consumer Behaviour – Cultural factors; Culture plays a very vital role in the determining consumer behaviour it is sub divided in. Advertising is important for goods in which branding is important, e.g. Factor 5: Substitutes. Explain any four important factors that affect the demand for a commodity. (10; 100; 1000; 10000, etc.) The operators to be examined are the four major operators in the UK: BTCellnet, One2one, Orange and Vodafone. Expectations as to prices: The people are in a position to hold money when they expect the prices to fall. In that case, the purchasing power of money rises and the value of goods depreciates relative to money. e.g. It also shows the graph of variables and their descriptive statistics. This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here! 1 decade ago. There are 4 factors that influence the price elasticity of demand: - The availability of substitutes - The specific nature of the good - The part of income spent on the good - The time consumers have to buy the good . To simplify our analysis, we will assume there are only two ways to hold wealth: as money in a checking account, or as funds in a bond market mutual fund that purchases long-term bonds on behalf of its subscribers. The demand for money depends on three main factors: national income, the price level and the rate of interest. There are many factors affecting the demand for money. Goods often bought with borrowed money include houses, cars, holidays and expensive consumer durable goods. The demand for certain goods is influenced by the interest rate. The supply of money goes up. A product for which customers’ tastes and preferences are higher, its demand will increase and so its demand curve. For some luxury goods, income will be an important determinant of demand. Let’s use income as an example of how factors other than price affect demand. In this way the demand for the item used as money does increase somewhat. The greater number of transactions, the larger is the demand for money likely to be. What are four factors that affect demand for money?Explain Follow 3 answers 3 Report Abuse What are four factors affect demand for money?What are four factors that affect demand for money?What four fundamental factors affect the cost of There are a number of factors that affect resource demand. kbenson55. Nos partenaires et nous-mêmes stockerons et/ou utiliserons des informations concernant votre appareil, par l’intermédiaire de cookies et de technologies similaires, afin d’afficher des annonces et des contenus personnalisés, de mesurer les audiences et les contenus, d’obtenir des informations sur les audiences et à des fins de développement de produit. Copyright © 2020 Multiply Media, LLC. Demand for goods goes up. Is it common to have the medicine come out your nose after a tonsillectomy? soft drinks but not for bananas. Public’s demand for cash balance. Few factors are mentioned below. Of course only the influencing factors will confirm what will change the consumers buying pattern. Answer: (A) Definition of demand: Demand may be defined as the quantity of a commodity that a consumer is able and willing to buy, at each possible price, over a given period of time. Explain how each of these factors affects the cost of money. Why don't libraries smell like bookstores? Relevance. Informations sur votre appareil et sur votre connexion Internet, y compris votre adresse IP, Navigation et recherche lors de l’utilisation des sites Web et applications Verizon Media. The people will increase their demand for money balances when they fear that their future income receipts will be less certain and may decline seriously. Lawrence Ball suggests that the use of adapted aggregates, such as near monies, can produce a more stable demand function. Factor 6: Complements. What is the supporting tissue of the embryo? Money is then worth less relative to the goods and services that you can purchase with it. The greater the frequency and regularity of receipts and disbursements, the smallest is likely to be the quantity of money demanded relative to expenditures. Anonymous. 0 0. 3 Answers. Factors Which Increase the Demand for Money A reduction in the interest rate. However, it will decrease demand for currency in the local trading market. Reserve Requirements Public’s demand for cash balance .Open Market Operations:Open market operations are conducted by the Central bank as it carries out and implements monetary policy. 4. The supply of goods goes down. Products used in place of each other; if price of sub. At point Q, for example, if the price is $20,000 per car, the quantity of cars demanded is 18 million. There are quite a few factors which influence the demand for money. 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