Types of Money Demand

 Types of Money Demand

Money demand types or motives can be classified into three classes i.e. Transaction motive, precautionary demand, speculative Demand.

1.    Transactional Demand

People need money for day to day transactions, because money is a medium of exchange. People need money both for personal consumption and for business exchanges.

2.    Precautionary Demand

Precautionary demand for money included the future accidental expenditure i.e. health etc. precautionary demand of money is both for personal and business reasons, there are number of unexpected event can happen in real life.

3.    Speculative Demand

Speculative demand is to get benefit or profit from an opportunity and for such benefit one must have liquid cash in hand