Answer to Question #274684 in Macroeconomics for Nishant

Question

E xplain using an appropriate model why transactions demand for money increases with square root of in come and interest rate decrease s with the square root of

Answer 1

Square-root rule a transactions demand of a household for cash. Based on the rule, household tend to hold less income when there is increase in interest rate. Money service is normal akin towards everything household is consuming.