Reply To: Demand for money


When people hold onto more money that means that they reduce their demand for goods and services. Therefore, prices of goods and services will decline. The effect on the price of any particular good, however, depends on all the other factors that influence the demand people have for that good in particular. A general price deflation doesn’t mean that the prices of each and every good must fall or that all the prices that do fall must do so by the same extent.