1.5 The ________ demand for money arises out of the need to hold money as a...
1.5 The ________ demand for money arises out of the need to hold
money as a medium of exchange. This
demand for money is a function of ________.
a) precautionary; interest rates
b) transactions; national income
c) speculative; interest rates
d) speculative; national income
e) transactions; interest rates
Homework Answers
Option b
Transaction demand for money is the amount of money needed to cover the needs an individual or firm in order to buy goods and services. The amount of money held for such purposes is dependent on the level of national income.
ANSWER :
Option b. Transactions ; national income
One needs to have money to purchase anything since none is the medium of exchange .
It is transactional demand. This money demand is a function of national income as a consumption component C.
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