If there is a financial panic and increased uncertainty about the returns in the stock market and bond market,what is the likely effect on money demand?

Question

Quizplus · Accepted Answer

In times of financial panic and increased uncertainty, investors tend to seek the safety of cash and cash equivalents, leading to an increase in the demand for money. This demand for money is driven by a desire to hold onto liquid assets that are easily accessible and can be used to quickly buy assets if and when the market stabilizes.

If There Is a Financial Panic and Increased Uncertainty About