Demand for money

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  • #18710

    Hi. When people are hoarding money and there is a demand for money wouldn’t the price of goods and services go up causing the price of gold to go up as well?


    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.


    Thanks for clearing that up for me Professor.

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