In the Keynesian system speculative demand for money arises because of
1 : uncertainty of future interest rate.
2 : unexpected expenditures.
3 : To bridge the gap between income and eventual expenditures.
4 : Relationship between changes in the interest rates and bond price.
Codes :
A)1 & 3 are correct
B)1 & 4 are correct
C)2 & 3 are correct
D)3 & 4 are correct

Question

Quizplus · Accepted Answer

In the Keynesian framework, speculative demand for money is primarily concerned with the uncertainty of future interest rates and the inverse relationship between changes in interest rates and bond prices. People hold money as a way to speculate on future movements in interest rates, with the expectation that if interest rates fall, the price of bonds will rise, allowing them to make a profit by selling bonds at a higher price.

In the Keynesian System Speculative Demand for Money Arises Because