Keynes Argued That the Precautionary Component of the Demand for Money

question 104

Multiple Choice

Keynes argued that the precautionary component of the demand for money was primarily determined by the level of people's ________,which he believed were proportional to ________.

• A)incomes;wealth
• B)incomes;age
• C)transactions;income
• D)transactions;age

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Definitions:

Stockholders' Equity

Funds contributed by the shareholders plus the company's earnings retained over time, reflecting the ownership value in the firm.

Market Rate

The prevailing interest rate available in the marketplace on investments or loans.

Coupon Interest Rate

The annual interest rate paid on a bond’s face value by the issuing entity, also known as the nominal rate.

Bond Issued At Premium

Occurs when a bond's selling price is higher than its face value, indicating investor confidence or lower-than-average interest rates.