A Person Keeps $500 in His Home in Order to Be

question 254

Multiple Choice

A person keeps $500 in his home in order to be prepared for some unforeseen future event. This reflects his

• A) speculative demand for money.
• B) asset demand for money.
• C) precautionary demand for money.
• D) liquidity demand for money.

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Definitions:

Fiscal Policy

Government policies related to taxation and spending to influence the economy.

Money Supply

The entire pool of financial assets in an economy, taking into account cash, coins, and all balances in checking and savings accounts, at a certain timeframe.

Recessionary Gap

A situation in economics where aggregate output is below potential output, leading to unemployment and underused resources.

Taxes

Compulsory financial charges or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund government spending and various public expenditures.