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

Statistics, please can you explainn what "down 0.1 percentage point on the ...

please can you explainn what "down 0.1 percentage point on the quarter means"?

Cost sharing in higher education - student loans, Cost Sharing in Higher Ed...

Cost Sharing in Higher Education - Student Loans The method is popular as it directly targets only those who are the recipients of the benefits of higher education.The method

Division of labour, Division of labour: Division of labour involves divi...

Division of labour: Division of labour involves dividing a production process into a number of smaller tasks for each task to be undertaken by a different worker. It may also be

Chap 6, For the pizza seller whose marginal, average variable, and average ...

For the pizza seller whose marginal, average variable, and average total cost curves are shown in the following diagram, what is the profit-maximizing level of output and how much

How many wokers should the firm hire(need help now!!plzz), Labor Total Out...

Labor Total Output 1 30 2 50 3 60 4 75 5 80 a) If the price of the firm’s output is $12 per unit and the wage rate is $100 per worker, how many workers should the firm choose to

Determinants of quantity supplied of a good, Determinants of quantity suppl...

Determinants of quantity supplied of a good The quantity of supplied of a product is influenced by factors such as the market price of the commodity, prices of inputs, techno

What is marvins optimal bundle, Marvelous Marvin spends his money on muffin...

Marvelous Marvin spends his money on muffins (m) and a composite good (c) (whose price you may assume is $1 throughout this problem). Marvin's utility is U = m + c and his income (

Homework questions, If a large amount of skilled labor immigrated into the ...

If a large amount of skilled labor immigrated into the country, which allows the available resources to produce more of goods X and Y, which of the following will occur? A.the y-i

Demand theory, what are some of recent development in theory of demand

what are some of recent development in theory of demand

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