Finalnub

According to my notes, demand for nominal money is affected by 3 things:

1. Price Level
2. Interest Rates
3. Financial Innovation

Inflation isn't explicitly listed as one of the factors affecting demand. However, you can look at it like this. If inflation goes up that means REAL interest rates have gone down. If real interest rates are down, I'm more inclined to borrow because the opportunity cost of holding money is also down. In that sense demand for nominal money actually goes up when there's inflation. That's just my theory I haven't really looked it over but that's how I've always understood it.