When Firms Hold Some of Their Money Because of Differences

question 30

Multiple Choice

When firms hold some of their money because of differences in timing between receipts and payments, this is the:

• A) assets motive
• B) speculation motive
• C) transactions motive
• D) precautionary motive

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Definitions:

Higher Wage

A payment for labor services that is above the average or minimum rate typically offered in the market or sector.

Derived Demand

Demand for a factor of production or input that arises from the demand for the final product it contributes to producing.

Marginal Productivity Theory

A principle in economics that suggests the payment to a factor of production (like labor or capital) corresponds to its marginal productivity, which is the additional output generated by one more unit of that factor.

Income Distribution

The way in which total income is shared among individuals or groups within a society.