Answer to Question #236840 in Macroeconomics for Bawa

Question

Distinguish between transactionary demand for money and speculative demand for money. What are the determinants of these demand for money types? Explain.

Answer 1

Transactionary demand for money comes as a result of money demand For utilizing it as an exchange medium for daily transactions. However, speculative demand for money comes from the uncertainties regarding money value of another assets which a person may hold including the money demand of taking advantage of the investment chances which may come up in future.

The determinant of the demand for money types include income level, price level, preferences, expectations and real GDP.