Carolina holds $2,000 in her savings account in case of a medical emergency.This represents the
A)Medical savings account.
B)Transaction demand for money.
C)Precautionary demand for money.

Question

Quizplus · Accepted Answer

Carolina is holding $2,000 as a precautionary measure in case of a medical emergency, which falls under the category of the precautionary demand for money. This type of demand arises due to uncertainty about future events, and individuals prefer to hold some cash as a precaution against unexpected expenses. It is not a medical savings account as it is not specifically intended for medical expenses, and it is not a transaction demand for money as it is not used for regular day-to-day transactions.

Carolina Holds $2,000 in Her Savings Account in Case of a Medical