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

Duality theorems, Duality Theorems: The relationship between the direc...

Duality Theorems: The relationship between the direct and indirect utility functions may be described by a set of duality theorems. The following illustrative theorems are pro

CONSUMER BEHAVIOR, DISCUSS THE HICKSIAN & SLUTSKIAN APPROACH TO CONSUMER BE...

DISCUSS THE HICKSIAN & SLUTSKIAN APPROACH TO CONSUMER BEHAVIOR WHERE THERE IS CHANGE IN PRICE OF ONE GOOD GIVEN TWO GOODS

What is demand curve, Demand Curve The demand curve is a graph which pr...

Demand Curve The demand curve is a graph which presents the amount of a good that consumers are willing and able to buy at various prices. A normal demand curve is downward slo

Taxing system, On what kind of income is our taxing system based?

On what kind of income is our taxing system based?

Human capital, Normal 0 false false false EN-IN X-NON...

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

Price mechanism, discuss how the price mechanism allocate resources in a fr...

discuss how the price mechanism allocate resources in a free market system

Indifference curve, What is indifference curve and its properties?

What is indifference curve and its properties?

Microenconomics 3, Output 0 Fixed cost $100 Varaible Cost 40 what is the T...

Output 0 Fixed cost $100 Varaible Cost 40 what is the Total cost and Total revenue also the Profit/Loss

Uses of price and income elasticity of demand, Uses of price and income ela...

Uses of price and income elasticity of demand: The concept of price elasticity of demand has some uses whihc include the following: (i) Pricing of goods and services It is

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