The demand for money is a derived demand as it is needed not solely for its own purpose but for the quantity of goods and services that it allow us to purchase.
In other words, money is the vehicle through which we can purchase our necessities and luxuries.
- Generally, we need money for three purposes namely;
- Transitionary motive which takes care of our daily transactions
- Precautionary motive which takes care of emergencies
Speculative motive allows us to invest in land, stocks, and treasury bills and so on.
Always remember, that the mindless pursuit of money is usually counterproductive to the society at large e. g money obtained through corruption, fraud and other illegal activities.