Explanation Macroeconomic variables such as the income level, the rate of interest and inflation as well as the uncertainty involved in predicting the future together determine the demand level for money. However, this demand is generally explained under three main motives. They are the transaction motive, the precautionary motive and the speculative motive. As per the transaction motive, money is being demanded for, as it is needed to carryout transactions within an economy. With the passage of time, the number of transactions carried out within an economy would increase as the level of income increases. This increase in the GDP would in turn increase the demand for money. As per the precautionary motive, individuals demand money to be used at unexpected events...

The variables of the macro economy that impact upon the demand for money at the aggregate level.

Macroeconomics (9th Global Edition)

9th Edition

ISBN: 9780134141534

Author: Andrew B. Abel, Ben Bernanke

Publisher: Pearson Global Edition

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To discuss: The variables of the macro economy that impact upon the demand for money at the aggregate level.

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