ECONOMICS
BUSINESS CYCLES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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How much wealth would you like?
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How much income would you like to earn?
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How much cash do you wish you could have?
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What proportion of your financial assets do you want to hold in the form of money?
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Detailed explanation-1: -What proportion of your financial assets do you want to hold in the form of money? Answer: DFeedback: Demand formoney is the proportion of your financial assets which you want to hold in theform of money.
Detailed explanation-2: -In economics, the demand for money refers to the desired amount of liquid assets that the people want to hold for the transaction purpose. Money demand depends on the income level of the economy and the interest rate of the bonds.
Detailed explanation-3: -What do economists mean by the demand for money? It is the amount of money-currency and checking account deposits-that individuals hold. What is the advantage of holding money? Money can be used to buy goods, services, or financial assets.
Detailed explanation-4: -The demand for money depends on three main factors: national income, the price level and the rate of interest. Transactions demand and precautionary demand vary directly with the first two factors but speculative demand for money vary inversely with the market rate of interest.
Detailed explanation-5: -Factors such as income, interest rate, price level, deposit rate, wealth, required reserve, individual preference, payment habit and brokerage fee/risk, all determines the desire of people to hold cash (demand for money).