Explain Why Investors Would Choose to Hold on to Money

question 53

Essay

Explain why investors would choose to hold on to money for investment purposes when money gives out a zero rate of return.

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Definitions:

Automatic Stabilizers

Changes in fiscal policy that stimulate aggregate demand when the economy goes into a recession without policymakers having to take any deliberate action

Budget Deficit

A situation where a government's expenditures exceed its revenues over a specific period of time.

Federal Reserve

The central bank of the United States, responsible for implementing monetary policy, supervising financial institutions, and providing services like clearing checks and distributing currency.

Aggregate

refers to the total amount or sum of individual parts in economics or finance.