The "Precautionary Demand" for Money Arises from the

question 1

Multiple Choice

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.

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Definitions:

Cash Equivalents

Short-term, highly liquid investments that are easily convertible to a known amount of cash and close to their maturity.

Balance Sheet

A declaration of a company's financial health, detailing assets, obligations, and the equity of its owners at a targeted date.

Equity Method

A method of accounting for an investment in common stock by which the investment account is adjusted for the investor’s share of periodic net income and cash dividends of the investee.

Equity Method

An accounting technique used to record an investor's proportional share of the profits and losses of an equity-invested company.