What are the two types of demand that make up total demand for money?

What will be an ideal response?

The first type of demand for money is transaction demand or demand for money as a medium of exchange. Households in part demand money because it is convenient for purchasing goods and services and valuable to have on hand because some purchases are unplanned. The level of nominal GDP is also a determinant of the total transactions demand for money. The larger the monetary value of goods and services in an economy, the larger the transaction demand for money. This increase in demand occurs in both cases when prices rise and real output increases.
The second type of demand for money is asset demand due to money’s function as a store of value. It’s attractive to hold some of one’s assets as money because it is the most liquid of all assets. Money is also relatively attractive to hold if other assets, like bonds, are expected to decline in value. On the flip side, money receives little or no interest, which can make it less attractive than other assets. Ultimately, what determines asset demand is the interest rate, which is inversely related to money demand.