One reason that people hold money is to pay for unexpected car repairs and other unpredictable expenses. This motive for holding money is called:
A) transactions demand.
B) precautionary demand.
C) speculative demand.
D) noncyclical demand.

Question

Quizplus · Accepted Answer

Precautionary demand is the motive for holding money as a precaution against unexpected events such as car repairs or medical emergencies. Transactions demand is for everyday transactions, speculative demand is for investment purposes, and noncyclical demand refers to the demand for money that is not influenced by economic conditions.

One Reason That People Hold Money Is to Pay for Unexpected