I need verification on my understanding as to whether the following factors affect the demand for money, and if so how they affect it:

Changes in Nominal National Income: will affect the transactions motive for money because changes in this will change the amount of money demanded in the economy as more/less will be demanded to buy more/fewer goods and services (shifts the liquidity preference (LP) schedule). Will have little effect on the precautionary motive if nominal national income increases, but the effect may be greater if nominal national income decreases. Changes in nominal national income may change the demand for government bonds (the main asset in focus of the Keynesian model, I presume) and may therefore change the speculative motive of the demand for money as well.

Changes in the level of inflation: higher inflation may require a higher demand for money.

Changes in the interest rates: results in movements along the liquidity preference curve. The effect is typically stronger on the speculative motive for demanding money.

Changes in overall outlook in the economy: a negative outlook may depress speculative spending which may increase the demand for money.

I believe these are the main reasons, and would like a verification as to whether what I've written is accurate.


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