11.   The transactions demand for money.

12.   In what follows, we ignore the possibility of such institutional changes and assume that the transactions demand for money depends only on money national income.

13.   This enables us to combine it with the transactions demand and to suppose that the total transactions and precautionary demand for money is a function of money national income.

14.   Indeed, in what follows, wherever we refer to the transactions demand, L t, it should be understood that this includes the precautionary demand.

15.   Graph shows the direct relationship between the transactions demand for money and national income.

16.   Note that the reason for the rise in the equilibrium rate of interest is that the higher income level will have brought forth an increased transactions demand for money.

17.   A bank loan, a government document, almost any transaction demands a little something extra.