The Demand for Money Is Purely a Transactionary Demand
Money and banking
The demand for money
Exam question: "The demand for money is purely a transactionary demand." Discuss The objective of this question is to discuss the statement: "The demand for money is purely a transactionary demand." This essay will begin by with determination of money. It will show that it is usual to distinguish three reasons why people want to hold their assets in the form of money. And these reasons are: the transactions motive, the precautionary motive and the asset or speculative motive. These motives are known as theories of money demand.
Money anything which is generally acceptable as a means of payment and which fulfil the four key functions of money', namely acting as a medium of exchange, unit of account, store of value and standard of deferred payment. In other word, money is a stock. It is the quantity of circulating currency and deposits held at any given time. We hold money now to spend it later. People can hold their wealth in various forms money, bills, bonds, equities and property.
The demand for money refers to the desire to hold money: to keep your wealth in the form of money, rather than spending it on goods and services or using it to purchase financial assets such as bonds or shares. People choose to hold their assets in the form of money because of three motives: the transactions motive, the precautionary motive and speculative motive.
Transactions demand for money
Individuals need to hold money in order to meet daily transactions such as buying petrol, paying for groceries or purchasing a newspaper. Everyone will hold a certain amount of money. The average amount held for transactions purposes depends upon the level of money income, the price level and the frequency of pay days. In terms of money income, the higher the money income, the greater the average expenditure on goods and services over the time period, hence the higher the level of transactions balances required. If the price level increases,
The demand for money
Exam question: "The demand for money is purely a transactionary demand." Discuss The objective of this question is to discuss the statement: "The demand for money is purely a transactionary demand." This essay will begin by with determination of money. It will show that it is usual to distinguish three reasons why people want to hold their assets in the form of money. And these reasons are: the transactions motive, the precautionary motive and the asset or speculative motive. These motives are known as theories of money demand.
Money anything which is generally acceptable as a means of payment and which fulfil the four key functions of money', namely acting as a medium of exchange, unit of account, store of value and standard of deferred payment. In other word, money is a stock. It is the quantity of circulating currency and deposits held at any given time. We hold money now to spend it later. People can hold their wealth in various forms money, bills, bonds, equities and property.
The demand for money refers to the desire to hold money: to keep your wealth in the form of money, rather than spending it on goods and services or using it to purchase financial assets such as bonds or shares. People choose to hold their assets in the form of money because of three motives: the transactions motive, the precautionary motive and speculative motive.
Transactions demand for money
Individuals need to hold money in order to meet daily transactions such as buying petrol, paying for groceries or purchasing a newspaper. Everyone will hold a certain amount of money. The average amount held for transactions purposes depends upon the level of money income, the price level and the frequency of pay days. In terms of money income, the higher the money income, the greater the average expenditure on goods and services over the time period, hence the higher the level of transactions balances required. If the price level increases,