A major difference between the transactions demand for money and the precautionary demand is that the
A. transactions demand means that people are foregoing interest but they are not foregoing interest in the precautionary demand.
B. transactions demand involves expected expenditures while the precautionary demand involves unexpected expenditures.
C. transactions demand is for emergencies while the precautionary demand is for every day expenditures.
D. transactions demand leads to the purchase of assets while the precautionary demand does not.
Answer: B
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Indicate whether the statement is true or false
If an economy is operating on its production possibility frontier, which of the following statements is true?
A. Products are produced using inefficient production technology. B. The capacity utilization rate is less than full production. C. The economy's labor force is fully employed. D. A fall in the price of an input will enable the economy to produce outside the production possibility frontier.