When Households Choose to Hold Money as a Store of Value

question 316

Multiple Choice

When households choose to hold money as a store of value, rather than holding assets such as certificates of deposit, stocks, and bonds, ________ demand for money results.

• A) liquidity
• B) transactions
• C) precautionary
• D) asset

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Definitions:

Commercial Paper

An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories, and meeting short-term liabilities.

Corporate Bonds

Long-term debt issued by private corporations typically paying semiannual coupons and returning the face value of the bond at maturity.

Invoice Price

The initial price that the manufacturer suggests the retailer to sell their product for, before any adjustments like discounts or rebates.

Accrued Interest

Interest that has been incurred but not yet paid or received, often relevant in bond investments and loans.