Question: Question Three [Total 30 marks (a) Explain the three motives behind the demand for money in Keynes' liquidity preference theory. (6 marks) (b) Compare and

Question Three [Total 30 marks (a) Explain the three motives behind

Question Three [Total 30 marks (a) Explain the three motives behind the demand for money in Keynes' liquidity preference theory. (6 marks) (b) Compare and explain the economies of scale in the transactions demand for money (Md) in the Baumol/Tobin Model and Quantity Theory of Money (QTM)? (6 marks) (c) How would the transactions demand for money change (in the Baumol/Tobin Model) if salaries are paid yearly (once a year) rather than monthly? (6 marks)

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