Author Question: The transactions demand for money exists because: a. people want to maintain a speculative cash ... (Read 28 times)

Hungry! · **on:** Jun 30, 2018

The transactions demand for money exists because:
a. people want to maintain a speculative cash reserve.
b. people are insensitive to interest rate fluctuations and prefer to hoard money.
c. people want to be prepared for unplanned emergency expenditures.
d. people prefer cash over bank deposits.
e. people do not receive their income at the same time they spend it.

Question 2

If tastes for a good decreased and the price of a substitute good decreased at the same time, as a result:
a. prices would rise.
b. prices would fall.
c. larger quantities to be exchanged.
d. we would not know which direction either prices or quantities exchanged would be altered without more information.