Question : 31) If a person holding money for the purchase of : 1384455

31) If a person is holding money for the purchase of goods and services, this demand for money is known as

A) speculative demand.

B) precautionary demand.

C) transactions demand.

D) real balance demand.

E) nominal balance demand.

32) The “transactions demand” for money arises from the fact that

A) there is uncertainty in the receipts of income.

B) there is uncertainty about the movement of interest rates.

C) households wish to have all their wealth in the form of money.

D) households decide to hold money in order to make purchases of goods and services.

E) households want to keep cash on had to buy bonds if bond prices drop.

33) The “precautionary demand” for money arises from the

A) fear that interest rates will fall.

B) fear that interest rates will rise.

C) need to make predictable purchases of goods and services.

D) uncertainty about when some expenditures will be necessary.

E) desire to avoid paying interest on credit purchases.

34) Other things being equal, the transactions demand for money tends to increase when

A) interest rates rise.

B) interest rates stop rising.

C) national income rises.

D) national income falls.

E) the price level falls.

35) Consider the demand for money. If real GDP falls, other things being equal, we can expect

A) an increase in the speculative demand for money.

B) an increase in the total demand for money.

C) a decrease in transactions demand for money.

D) an increase in transactions demand for money.

E) an increase in precautionary demand for money.

36) Suppose an economic analyst suggests that investors should now hold cash instead of stocks or bonds. The analyst is probably encouraging an increase in money balances for which reason?

A) transaction demand

B) precautionary demand

C) speculative demand

D) present value demand

E) portfolio demand

37) A firm that holds cash to avoid penalties associated with the late payment of bills is demonstrating which type of demand for money?

A) transactions demand

B) precautionary demand

C) speculative demand

D) present value demand

E) risk-return demand

38) Among other things, people hold cash balances for which of the following reasons?

1) to meet unforeseen emergencies

2) to maximize their returns on interest-earning assets

3) to guard against the uncertainty of the timing of receipts and payments

A) 1 only

B) 2 only

C) 3 only

D) 1 and 2

E) 1 and 3

39) Speculative demand for money arises from the desire by individuals and firms to hold cash balances

A) for speculative equity purchases.

B) in anticipation of changes in interest rates and bond prices.

C) to meet unforeseen business expenses.

D) in anticipation of investing in capital purchases for the firm.

E) to maintain adequate cash flow in case of inflation.

40) In the basic AD/AS macro model, it is assumed that, for any given interest rate, the demand for money depends on the

A) aggregate demand for goods and services.

B) level of government spending.

C) rate of growth of real GDP.

D) level of taxes.

E) level of real GDP and the price level.