Transactions Motive

Transactions Motive - size of the income and type of...

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Transactions Motive: Money is demanded to perform variety of regular economic transactions. Both households and firms have to carry out a variety of transactions for which they need money. Even an individual member going out to school , college or the workplace has to spend on transport, buying beverages, snacks etc. for which he needs some money. Throughout the day millions of transactions are taking place for which money is paid or received. The demand for money on account of the transactions motive is fairly stable. It is related to the
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Unformatted text preview: size of the income and type of activities performed by individuals, households and firms. Since the size of the income does not change suddenly and significantly, the demand for money for this purpose is normally constant in the short run. Demand for money to satisfy transactions motive is about 50 percent of the size of an individual or household income....
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