00:01
Hello, so today i'm going to answer your question about the four factors that determine the demand of the money supply for doing so i write each concept and now i'm going to explain it on detail so the first element would be the supply of goods so as you can imagine if there are more goods in the economy that increase the demand of money because you are going to require more elements to perform this transaction so basically relationship it's more goods or services more money you need or the demand is bigger.
00:36
This also happens when the economy is getting really stock.
00:39
What the people with a monetary policy will focus is trying to increase the supply of money in order to the consumption be incentivized as individual schools start using cold and money for all those goods that are in the economy.
00:55
The second one will be the speed of transactions.
00:58
So basically when there is a lot of speeds in the transactions, you don't need that much money because it's always flowing, but if the economy is really slow, they don't need as much more, they need a lot of money because the money is going to take a lot of time to pass from one pocket to the other.
01:15
So basically what you know is that when there is a lot of speed, the money is flowing constantly, so the amount is small.
01:24
But if the speed is really slow, there need to be a lot of money in order to keep doing the transactions.
01:32
The third one is the security.
01:34
So individuals will understand that money is an asset.
01:37
So what they want to do is have a lot in the pocket just to have the certainty that they would have the purchasing power.
01:44
So more insecurity or whether or more security requires less money because they trust in the banks.
01:52
So they would keep the money in the bank without any kind of adverse behavior as they know that it's safely there and they don't need to have it in the pocket.
02:01
And the final one will be the interest rate because that's the opportunity cost...