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JAMB Economics 1984 Question 34

Question 34

Money and Inflation

Lord Keynes identified three motives for holding money, that is, keeping one's resources in liquid form instead of in some form of investment. The motive which relates to making provision for the 'rainy day' is known as

  1. A.speculative motive
  2. B.precautionary motive
  3. C.transactions motive
  4. D.investment motive
  5. E.rainy day motive.
Show the answer and explanation

Answer: B (precautionary motive)

Explanation

Money held for emergencies and unforeseen needs is held for the precautionary motive.