Income of Rs 100 arrives on day one and is spent evenly through the month. The average transaction demand for money is

1. The cash balance starts at Rs 100 and runs down evenly to Rs 0. 2. Average holding = (opening + closing) ÷ 2. 3. = (100 + 0) ÷ 2 = **Rs 50**. 4. So average transaction demand is half the monthly income. Rs 100 is the income itself, not the average balance. _Source: syllabus Introductory Macroeconomics, Ch 3 "Money and Banking", section 3.2 DEMAND FOR MONEY AND SUPPLY OF MONEY_