Tobin's Model of the Speculative Demand for Money Shows That

question 9

Multiple Choice

Tobin's model of the speculative demand for money shows that people hold money as a ________ as a way of reducing ________.

• A)medium of exchange;transaction costs
• B)medium of exchange;risk
• C)store of wealth;transaction costs
• D)store of wealth;risk

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Definitions:

Shareholders' Equity

The residual interest in the assets of a corporation after deducting its liabilities.

Liquid Asset

An asset that can be quickly converted into cash with minimal impact to its value.

Liquid Assets

Assets that can be easily converted into cash with little impact on their value.

Retained Earnings

The portion of net income that is not distributed to shareholders and is instead reinvested in the company.