1.   With Income and hence the transactions demand for money rising less than wealth, one would expect time deposits to rise.

2.   The second argument involves the transactions demand for holding cash balances instead of interest-bearing assets.

3.   The inconvenience of doing this makes the effect on transactions demand rather limited.

4.   In such a case the rise in the transactions demand for money will match the rise in the supply of money.

5.   This would reduce aggregate demand directly and thus reduce the transactions demand for money.

6.   If people think inflation will rise, the transactions demand for money may rise.

7.   Thus, the demand for money is called a transactions demand.

8.   Using functional notation, we can write where L, is the transactions demand for money.

9.   Note that for a given level of income, the transactions demand for money would rise if more households were paid fortnightly or monthly rather than weekly.