 The key variables of the demand for money are then the nominal interest rate, the level of real income that corresponds to the number of desired transactions, and the fixed transaction costs of transferring one’s wealth between liquid money and interest-bearing assets.The model was originally developed to provide microfoundations for aggregate money demand functions commonly used in Keynesian and monetarist macroeconomic models of the time.Later, the model was extended to a general equilibrium setting by Boyan Jovanovic (1982) and David Romer (1986).