The quantity of money demanded to satisfy transaction needs:
A) is intended for unexpected expenditures.
B) increases with the level of real GDP.
C) decreases with the level of real GDP.
D) is unrelated to either national income or the interest rate.

Question

Quizplus · Accepted Answer

Transaction demand for money refers to the amount of money needed to facilitate daily transactions. As the level of real GDP increases, the volume of transactions increases, leading to an increase in the demand for money to carry out those transactions. Hence, the quantity of money demanded to satisfy transaction needs increases with the level of real GDP.

The Quantity of Money Demanded to Satisfy Transaction Needs