ABSTRACT
One normally begins the study of money in the Principles course with an introduction to the functions of money, the other side of which is the rationale for holding money. Of course, the most obvious purpose served by money is as a facilitator of transactions; that is, it provides a commonly accepted medium of exchange through which trade takes place. This gives rise to what can be considered as “transactions money,” which relates to the M 1 classification of money, consisting of currency plus demand deposits; the latter also are referred to as checking accounts or checkable deposits. And this is typically the means through which households acquire goods and services.
