Because Treasury bills pay a higher return than money and have no risk
A)the transactions demand for money may be zero.
B)the precautionary demand for money may be zero.
C)the speculative demand for money may be zero.
D)all three of the above motives for holding money will be zero.

Question

Quizplus · Accepted Answer

The speculative demand for money is the demand to hold money for investment purposes, such as purchasing stocks or bonds. Since Treasury bills pay a higher return than money, people may choose to invest their money in Treasury bills instead, reducing their speculative demand for money. The transactions demand for money (demand for money for day-to-day transactions) and the precautionary demand for money (demand for money as a buffer against unexpected expenses) may still exist, but the speculative demand for money may be zero.

Because Treasury Bills Pay a Higher Return Than Money and Have