The transactions demand for money exists because:
A)people want to maintain a speculative cash reserve.
B)people are insensitive to interest rate fluctuations and prefer to hoard money.
C)people want to be prepared for unplanned emergency expenditures.
D)people prefer cash over bank deposits.
E)people do not receive their income at the same time they spend it.

Question

Quizplus · Accepted Answer

The transactions demand for money arises because people receive income at different times than when they need to spend it, necessitating holding money to bridge this timing gap.

The Transactions Demand for Money Exists Because