The money that households might hold either as money or in interest-bearing assets, depending on the interest rate, is called the:
A) precautionary demand.
B) transactions demand.
C) speculative demand.
D) liquidity motive.
E) investment motive.

Question

Quizplus · Accepted Answer

The money that households hold as either money or interest-bearing assets for speculative purposes is referred to as speculative demand. This demand is motivated by the potential profit that can be earned through the interest earned on interest-bearing assets.

The Money That Households Might Hold Either as Money or in Interest-Bearing