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According to Keynes, how is the transactions demand for money affect by the interest rate

      

According to Keynes, how is the transactions demand for money affect by the interest rate

  

Answers


Dana
According to Keynes, the transactions demand for money is interest inelastic. But at very high interest rates and with increased income people will convert some of their idle balances into interest bearing securities. This according to Keynes the transactions for money will be interest elastic at very high interest rates. In the post Keynesian theory therefore, transactions demand for money is a function of income and interest rate

Dana05 answered the question on August 14, 2019 at 07:17


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