The Transactions Demand for Money Exists Because Households

question 79

Multiple Choice

The transactions demand for money exists because households

• A) are insensitive to interest rate changes.
• B) must save for unexpected emergencies.
• C) do not like the fact that money is a liquid asset.
• D) do not receive their incomes at the same time they wish to make purchases.

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Definitions:

Capital Gain

The profit earned from the sale of an asset, such as stocks or real estate, which exceeds its purchase price.

Dividend Yield

A metric showing the yearly dividend payment of a company as a proportion of its stock price.

Total Return

The overall financial gain or loss on an investment, including both the change in value and any income from dividends or interest, over a specific period.

Probability

A measure of the likelihood of an event occurring, often expressed as a number between 0 and 1.