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    Three Basic Demands for Money

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    Money is an interesting topic and there is much to learn that is not common knowledge regarding how we create money, especially money that is just printed!

    Please help me to understand the categories and terms of the three basic demands for money and what the number of categories of the money supply are.

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    Solution Preview

    Money in a modern economy is 'created' by the central bank of a country. The legislation of that country authorizes the central bank to create and issue money.

    Fundamentally there are three categories of money. First, it is commodity money where a commodity would carry out the functions of money. The commodity would have the same value had it not been used as money. For example, gold is a commodity money. The second type of money is commodity ...

    Solution Summary

    This solution response provides you with a structured explanation of the three demands for money. It also gives you the relevant references.