The financial encyclopedia uses cookies to improve your user experience. Find out more here!



Interest-elasticity of the demand for money


The proportional change in the quantity of money demanded divided by the proportional change in interest rate. This is a measure of the responsiveness of the demand for money to changes in interest rates. A minus sign is typically inserted into the definition to make the elasticity a positive number.


Reference: Oxford Press Dictonary of Economics, 5th edt.