PRC-3 · Chapter 17 · Question 9 of 20
According to Keynesian theory, an investor chooses to hold physical cash in a safe instead of buying bonds because they predict bond prices will soon crash. This is an example of the:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Speculative motive
Explanation
The speculative motive involves holding liquid cash to take advantage of future changes in the prices of financial assets or interest rates.
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