When households hold money for unplanned expenditures and emergencies, it is called

Question

Quizplus · Accepted Answer

The precautionary demand for money refers to the demand for money as a precaution or security measure against unforeseen expenditures or emergencies. Therefore, option D is the correct choice. Option A, the speculative demand for money, refers to the demand for money to take advantage of profitable investment opportunities. Option B, the transactions demand for money, refers to the demand for money to make routine purchases and payments. Option C, the irrational demand for money, is not a valid concept in economic theory.

When Households Hold Money for Unplanned Expenditures and Emergencies, It