1.   But with monthly payment, money balances will be held to meet expenditures up to one month in the future.

2.   In the meantime they will hold idle money balances instead.

3.   Money balances held for this purpose are called idle balances.

4.   If people expect prices to rise, they may reduce their money balances and purchase goods and assets now, before prices do rise.

5.   If security prices are anticipated to fall or the exchange rate to rise, people will demand to hold more money balances.

6.   If the rate of interest were above re, people would have money balances surplus to their needs.

7.   Similarly, if the rate of interest were below re, people would have insufficient money balances.

8.   Thus people economize on money balances and V rises back again.

9.   Over liquid banks will have money balances earning no return, so that profit opportunities are being lost.