The demand for money as a cushion against unexpected contingencies is called the
A)transactions motive.
B)precautionary motive.
C)insurance motive.
D)speculative motive.

Question

Quizplus · Accepted Answer

The precautionary motive refers to the demand for money as a buffer or cushion against unexpected events such as medical emergencies, job loss, or car repairs. This is different from the transactions motive (demand for money to make routine purchases), the speculative motive (demand for money to take advantage of expected changes in asset values), and the insurance motive (demand for money to protect against specific risks).

The Demand for Money as a Cushion Against Unexpected Contingencies