The Demand for Money by Individuals Risk Holding money is risky An unexpected increase in the prices of goods and services could reduce the value of money in terms of the commodities consumed Changes in the risk of holding money need not cause individuals to reduce their demand for money any change in the riskiness of money causes an equal change in the riskiness of bonds Copyright C 2003 Pearson Education, Inc Slide 14-9Copyright © 2003 Pearson Education, Inc. Slide 14-9 ▪ Risk • Holding money is risky. – An unexpected increase in the prices of goods and services could reduce the value of money in terms of the commodities consumed. • Changes in the risk of holding money need not cause individuals to reduce their demand for money. – Any change in the riskiness of money causes an equal change in the riskiness of bonds. The Demand for Money by Individuals