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The motives for holding money
Match the correct motive for holding money to each definition in the following table.
DefinitionMotiveThe stock of money people hold to take advantage of future changes in the prices of financial assets other than money The stock of money people hold to pay everyday predictable expenses The stock of money people hold to pay unpredictable expenses
Identify the motive for holding money in the following scenario.
Charles moves to a smaller apartment. Because of the lower monthly rent, he places a larger share of funds from his paycheck in a retirement fund and a smaller share in his savings account. This is an example of a decrease in Charles's demand for money.
Complete the following statement about the relationship between the interest rate and the demand to hold money for asset purposes.
As the interest rate rises, the opportunity cost of holding money, and the demand for money.
This document contains various important questions and their appropriate answers in the subject field of Economics.
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