Transactions demand

Transactions demand

Transactions demand is the demand for financial assets, "e.g.", securities, money or foreign currency. It is used for purposes of business transactions and personal consumption.

The need to accommodate a firm's expected cash transactions.

In economic theory, specifically Keynesian economics, transactions demand is one of the determinants of demand for money (and credit), the others being speculative demand and precautionary demand. Transactions demand is illustrated as a vertical line on the money demand graph.

The Baumol-Tobin model focuses on the optimium number of transactions for a household.

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