Statement I: The precautionary and speculative demands of money are virtually identical.
Statement II: The speculative and transaction demand for money are virtually identical.

Question

Quizplus · Accepted Answer

Both statements are false. The precautionary demand for money refers to money held for unexpected future needs, while the speculative demand refers to money held for potential investment opportunities. These two demands are different. Similarly, the transaction demand for money refers to the amount of money an individual needs to conduct normal transactions, while the speculative demand refers to money held for potential short-term gains from investing. These two demands are also different.

Statement I: the Precautionary and Speculative Demands of Money Are