Money Search Concept
Money Search by the economic agents represents the quantity of money that these want to detain taking into account the opportunity cost that they have to support for its possession, which corresponds to the interest that will have to pay or to the interest that will have to sacrifice for not owning another type of asset. This way, the money search will emerge as a negative function relatively to the markets’ interest rates, being, the higher the interest rates lower will be the quantity of money that the economic agents wish to detain.
The reasons for the currency search can be grouped in two big groups, namely:
- Money Search for Transactions: the main function of the money is to serve as a trade mean, being, to make payments of goods and services, so the currency search for transactions also forms the main reason for the currency search by the economic agents;
- Money Search for Value Reserve: on demand deposits and the own bills and coins form financial assets of high liquidity and low risk, and can be used as value reserve for future consumption transfer.
601 Visualizações 1 Total
