The precautionary demand for money is the demand for money:
A) for normal transactions purposes.
B) for normal investment purposes.
C) for special stock purchases.
D) to protect against inflation.
E) to cover unexpected events.

Question

Quizplus · Accepted Answer

Precautionary demand for money refers to the demand for money to cover unexpected events such as emergencies, sudden illness, or unemployment. It is not related to normal transaction purposes, investment purposes, special stock purchase, or protecting against inflation.

The Precautionary Demand for Money Is the Demand for Money