The speculative demand for money:
A) varies inversely with income.
B) is only concerned with active money.
C) involves holding money for unexpected problems.
D) varies directly with the transactions demand for money.
E) varies inversely with the interest rate.

Question

Quizplus · Accepted Answer

The speculative demand for money is inversely related to the interest rate because as interest rates rise, the opportunity cost of holding money increases, leading individuals to prefer investing in interest-bearing assets rather than holding onto cash.

The Speculative Demand for Money