People learn to hold a specific quantity of money to purchase groceries, theater tickets, gasoline, clothes, film, and other items they habitually buy. This demand for money serves their
a. precautionary motive
b. speculative motive
c. transactions motive
d. volatility motive
e. liquidity motive
C
You might also like to view...
If the United States has a $300 billion trade deficit, then there must be:
A. net capital inflows of $300 billion. B. net capital outflows of $300 billion. C. net capital inflows of -$300 billion. D. no capital inflows or capital outflows.
In the early 2000s, banks lowered lending standards to comply with the Community Reinvestment Act
Indicate whether the statement is true or false
A result of a positive externality in the production of a good is that
A) the price system will over-allocate resources to the production of that good or service. B) the price system will under-allocate resources to the production of that good or service. C) the market supply will be too high. D) the market demand will be too high.
Answer the following questions true (T) or false (F)
1. If a state requires all drivers to buy auto insurance, the problem of adverse selection is eliminated. 2. Adverse selection is a situation in which one party to a transaction takes advantage of knowing more than the other party to the transaction. 3. A doctor pursuing his own interests rather than the interests of his patients is an example of the principal-agent problem.