Demand for Money (liquidity preference) shows how much money people want to hold at various income levels and interest rates. Motives for holding money: Transactions motive (paying bills, salaries—increases with income), Precautionary motive (emergencies, unexpected needs—increases with income), Speculative motive (waiting for favorable investment opportunities—increases when interest rates expected to rise, decreases when rates expected to fall). Components: Quantity demanded increases with income, decreases with interest rates (opportunity cost of holding money). Liquidity trap: When interest rates extremely low, money demand becomes infinite (interest rate insensitive); monetary policy loses effectiveness. Equilibrium: Money demand = Money supply determines equilibrium interest rate; if demand > supply, rates rise; if supply > demand, rates fall. Graphs: L (liquidity preference/money demand) curve shows inverse relationship with interest rate (downward sloping); L-curve position depends on income level. Changes: Higher income shifts L-curve right (demand increases); expectations affect speculative demand. Real vs. nominal: Money demand adjusted for inflation (real money demand = nominal demand / price level). Policy implications: Understanding money demand helps monetary authorities set interest rate targets. Indian context: Money demand influenced by income growth, inflation expectations, financial development. ICAI focus: Motives, relationship with income and interest, equilibrium. Exam tip: "Higher income increases money demand; higher interest rates decrease it"—opposite relationships.