The demand for money that households keep for emergency purposes is known as the:
A) precautionary demand.
B) emergency demand.
C) speculative demand.
D) transactions demand.
E) temporary demand.

Question

Quizplus · Accepted Answer

The demand for money that households keep for emergency purposes is known as the "precautionary demand." This refers to the desire to hold a certain amount of money in case of unexpected emergencies, such as medical bills, car repairs, or job loss. This demand is one of the reasons why people hold money, alongside the transactions demand and speculative demand.

The Demand for Money That Households Keep for Emergency Purposes