A consumer holds money to meet spending needs. This would be an example of the
A) use of money as a measure of value.
B) use of money as legal tender.
C) transactions demand for money.
D) asset demand for money.

Question

Quizplus · Accepted Answer

The transactions demand for money refers to the demand for money to meet daily transactional needs, such as purchases of goods and services. Holding money to meet spending needs falls under this category. The use of money as a measure of value refers to its function as a unit of account, while the use of money as legal tender refers to its acceptance as a means of payment by law. The asset demand for money refers to the demand for money as a store of value, for which holding money provides no interest or return.

A Consumer Holds Money to Meet Spending Needs