People learn to hold a specific quantity of money for their groceries,theatre tickets,petrol,clothes,film and other items they habitually purchase.This behaviour is representative of the:
A)precautionary demand.
B)speculative demand.
C)transactions demand.
D)volatility demand.
E)habitual demand.

Question

Quizplus · Accepted Answer

The behavior of holding a specific quantity of money for specific purchases represents the transactions demand. This is because people keep money for day-to-day transactions such as groceries, petrol, clothes, movie tickets, etc. The other options are not applicable in this context. Precautionary demand is the demand for money to meet unforeseen expenses, speculative demand is the demand for money for investment purposes, and volatility demand is not a recognized term in economics. Habitual demand can be a common behavior, but it is not a relevant concept in this context.

People Learn to Hold a Specific Quantity of Money for Their