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GCE Economics 1990 Question 2

Question 2

Money and Inflation

Which of the following are resources for holding money instead of investing it?
I. Transaction motive
II. Precautionary motive
III. Speculative motive
IV. Liquidity motive

  1. A.I and II only
  2. B.I and III only
  3. C.I, II and III only
  4. D.I, II and IV only
  5. E.II, III and IV only.
Show the answer and explanation

Answer: C (I, II and III only)

Explanation

Keynes gave three motives for holding money (liquidity preference): transactions, precautionary and speculative. 'Liquidity motive' is not a separate motive.