It is important to understand that money like any other commodity is subject to the forces of supply and demand. However, instead of being bought and sold, money is borrowed and lent. The supply curve of money originates from the desire to borrow and the demand curve from the willingness to lend.

Question

Quizplus · Accepted Answer

The supply curve of money is determined by the central bank and the banking system, reflecting how much money is available in the economy, while the demand curve for money is determined by individuals and businesses' desire to hold money for transactions, precaution, and speculative purposes, not solely by the willingness to lend.

It Is Important to Understand That Money Like Any Other