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- Subject
- Money, Interest Rates And Outputeconomics-mcqs › money-interest-rates-and-output
- Published
- 31 May 2019
- Last updated
- 28 May 2026
What is the primary reason individuals keep money on hand for everyday purchases called?
Multiple choice question for Money, Interest Rates And Output. Select an option, then review the explanation below.
Explanation
The main reason people hold money to facilitate regular purchases is known as the transaction motive. Other motives include precautionary (holding money for unexpected needs), speculative (holding money to take advantage of future investment opportunities), and profit motive (aiming for financial gain).
More Money, Interest Rates And Output MCQs
Practice related questions from the same subject.
- 1.How does a decrease in interest rates affect the monetary base, consumer credit availability, and the cost of consumer credit?
- 2.Which variable do central banks typically set directly, and which variable adjusts as a consequence?
- 3.What is it called when the central bank purchases financial assets in the open market to expand the monetary base?
- 4.M4 is considered a __________ monetary aggregate and encompasses deposits held at both __________ and __________?
- 5.Assuming all other factors remain constant, what happens to the quantity of real money holdings when interest rates increase?