CA Foundation P4 · Chapter 8 · Question 3 of 15
According to Keynes, the three motives for holding money are:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Transactions, precautionary and speculative motives
Explanation
Keynes' liquidity preference theory identifies the transactions motive (day-to-day payments), the precautionary motive (unforeseen contingencies) and the speculative motive (holding money to take advantage of expected changes in bond prices and interest rates).
More Money Market MCQs
- Q5Using Fisher's equation MV = PT, if money supply M = Rs. 500 crore, velocity V = 6 and volume of transactions T = 1,500 crore units, the…
- Q6According to the Cambridge cash-balance equation M = kPY, if k = 0.25 and nominal income PY = Rs. 8,000 crore, the demand for money is:
- Q7In the RBI's monetary aggregates, broad money (M3) is equal to:
- Q8The currency-deposit ratio is 0.2 and the reserve-deposit ratio is 0.1. If high-powered money is Rs. 500 crore, the money supply is:
- Q9Reserve money (high-powered money) consists of: