How does an increase in inflation generally affect the demand for money, particularly in relation to the transaction motive?

When inflation increases, the value of money decreases, meaning that each dollar buys fewer goods and services. This situation affects the demand for money because people need more cash on hand to make everyday purchases. For example, if prices rise, a person might need to carry more money to buy the same groceries they could have bought for less last month. As a result, the transaction motive for holding money increases, as individuals and businesses want to ensure they have enough cash to meet their spending needs. Therefore, higher inflation generally leads to a higher demand for money to facilitate transactions.