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WAEC Economics 2001 Question 32

Question 32

Money and Inflation

Money is demanded for which of the following reasons?

  1. A.To meet unforeseen contingencies
  2. B.To solve the problem of inflation
  3. C.It is easily divisible
  4. D.It is portable.
Show the answer and explanation

Answer: A (To meet unforeseen contingencies)

Explanation

The precautionary motive: people hold money to meet unexpected needs.