According to Keynes, the transactions demand for money is a direct proportional and positive function of the level of income. Which of the following…

CA Foundation · Business Economics · PYQS · May 2026
According to Keynes, the transactions demand for money is a direct proportional and positive function of the level of income. Which of the following equations correctly represents this relationship?
(A) A. Lr = Y-k
(B) B. Lr = k Y
(C) C. Lr = k + Y
(D) D. Lr = Y/k

Suggested Answer and Working Notes:

Correct Answer: Option (B)

B. Lr = k Y

Topics: Money Market

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