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Transaction Demand
(redirected from Transaction Demand for Money)

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Transaction demand (for money)
The money needed to accommodate a firm's expected cash transactions.

Transaction Demand
The amount of money needed to cover the needs of an individual, firm, or nation. That is, transaction demand for money is a measure of how much of a certain currency people need in order to buy the goods and services they use. Generally speaking, if an economy is healthy, there is a high transaction demand for money because people are buying more goods and services. Conversely, if an economy is in trouble, people buy fewer goods and services. Unless there is a significant, sudden change in the transaction demand, central banks have little trouble adjusting the money supply to accommodate the changes that do occur.


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In Section 4, a theoretical money demand function based on the theory of transaction demand for money is specified.
One explanation for this negative (albeit insignificant) impact may be found in Evan's |24~ and Tatom's |72~ argument that increased interest-rate risk exerts an adverse effect on aggregate production which in terms decreases the transaction demand for money.
Keynes also provided for a transaction demand for money which is a function of income.
 
 
 
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