____ refers to the economic reason for holding cash in the bank to pay bills for the goods and services used.
A)Compensating balance
B)Transactions demand
C)Precautionary demand
D)Speculative demand

Question

Quizplus · Accepted Answer

Transactions demand refers to the need for cash to pay for regular expenses such as bills for goods and services used. Compensating balance refers to the minimum balance required to be maintained by the bank in exchange for certain services. Precautionary demand refers to holding cash for unforeseen emergencies, while speculative demand refers to holding cash to take advantage of future investment opportunities.

____ Refers to the Economic Reason for Holding Cash in the Bank