The transactions demand for money refers specifically to money narrowly defined to include only its liquid forms, especially cash and checking account balances.
This form of money demand arises from the absence of perfect synchronization of payments and receipts.
The transactions demand for money is positively affected by the amount of real income and expenditure, and negatively affected by the interest rate on alternative assets, which is the opportunity cost of holding money for any reason.
It also depends on the timing of expenditures and the length of the payment period.
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