Transactions demand for money, Microeconomics

Assignment Help:

Transactions demand for money:

Transactions demand for money represents cash balances held by economic agents in order to carry outordinary everyday transactions.For example, individual consumers need to hold money to buy food, cloth, pay bus fares, and so on. Similarly, business organizations need money to pay wages and electricity bills, buy raw materials, fuel for vehicles, etc.the transactions demand for money is directly related to income, and inversely related to the rate of interest that could be earned from holding interest-yielding assets in the alternative.

The precautionary motive, on the other hand, refers to holding cash balances as a precaution against unexpected events. For instance, people hold money to provide them with some degree of security against sudden illness, accidents, fire or flood disaster, and so on. The main factor influencing this motive is the level of income.


Related Discussions:- Transactions demand for money

Allocated stock and safety stock - mrp system, Allocated Stock and Safety S...

Allocated Stock and Safety Stock  Allocated stock  A category of stock which ensures that current stock is set aside and not issued under the normal procedure.  Safet

#Demand and supply equations, Ask question # how do you formulate a demand ...

Ask question # how do you formulate a demand and supply equations when you a table of prices, quantity demanded and supplied?

Current account deficit, Current Account Deficit (CAD): Boon or Bane ...

Current Account Deficit (CAD): Boon or Bane The general belief is that high CADs are dangerous. In general, this is correct. But the converse that low CADs are good is not. A

Equilibrium exchange rate, Equilibrium Exchange Rate: The theory of ex...

Equilibrium Exchange Rate: The theory of exchange rate determination explains how demand and supply of foreignexchange interact and jointly determine the equilibrium exchange

Find steady state level - production function, 1. Consider a model economy ...

1. Consider a model economy with a production function Y = K 0.2 (EL) 0.8 , where K is capital stock, L is labor input, and Y is output. The savings rate (s), which is define

MARKET TARGETING STATERGIES, A MANUFACTURING UNIT IS INTERESTED IN DEVELOPI...

A MANUFACTURING UNIT IS INTERESTED IN DEVELOPING A BENEFIT SEGMENTATION OF THE CAMERA MARKET. SUGGEST SOME MAJOR BENEFIT SEGMENT WITH MARKET TARGETING STRATEGIES?

Elasticity, Elasticity is a term broadly used in economics to signify the “...

Elasticity is a term broadly used in economics to signify the “responsiveness of one variable to changes in to another.” Types of Elasticity can be explained as follows: Th

Budget Deficits and Surplus, In year one, suppose the federal government ha...

In year one, suppose the federal government has no national debt and spends $100 billion, while raising only $50 billion in taxes. The U.S. Treasury will issue $ billion of governm

Describe trade unions and collusion among employees, Trade union can also p...

Trade union can also pay a useful role in improving the wages of the workers without causing adverse effects on employment. This case which is intensely associated with the idea of

Equilibrium, short run equilibrium of the industry

short run equilibrium of the industry

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd