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27 April, 00:20

The basic determinant of the transactions demand for money is the

a. price level.

b. reserve ratio.

c. level of nominal GDP.

d. interest rate.

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Answers (1)
  1. 27 April, 03:36
    0
    The correct answer is option c.

    Explanation:

    The transactions demand for money means that money is demanded to make payments for day to day transactions. As the nominal GDP increases, there is an increase in income as a level. With more income, people will consume more which more transactions. People will need more money to pay for these transactions. So more will be the demand for money.

    Thus we can say that the basic determinant of transactions demand for money is the level of nominal GDP.
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