Three important motives for people to hold money and forego earning interest payments are:
A) the opportunity cost motive, precautionary motive and speculative motive.
B) the transaction motive, precautionary motive and speculative motive.
C) the transaction motive, safety motive and speculative motive.
D) the transaction motive, precautionary motive and special motive.

Question

Quizplus · Accepted Answer

The three motives for holding money are the transaction motive (to facilitate the exchange of goods and services), the precautionary motive (to have funds available for emergencies or unexpected expenses), and the speculative motive (to take advantage of investment opportunities or to avoid losses in uncertain markets). Option B includes all three correct motives. Option A includes "opportunity cost motive," which is not a commonly accepted motive for holding money. Option C includes "safety motive," which is not a commonly accepted motive as it is similar to the precautionary motive. Option D includes "special motive," which is not a commonly accepted motive for holding money.

Three Important Motives for People to Hold Money and Forego