Asked by Anthony Flesher on Jun 05, 2024
Verified
____ refers to the economic reason for holding cash in the bank to pay bills for the goods and services used.
A) Compensating balance
B) Transactions demand
C) Precautionary demand
D) Speculative demand
Transactions Demand
The demand for money or assets that can be quickly converted into money for the sake of everyday transactions.
Economic Reason
The underlying rationale or motive behind financial decisions or actions, often based on maximizing efficiency or profit.
- Learn about the foundations and forms of cash holding demands, such as those for transaction purposes, as a precaution, and for speculation.
Verified Answer
BA
Batool AlsaeedJun 08, 2024
Final Answer :
B
Explanation :
Transactions demand refers to the need for cash to pay for regular expenses such as bills for goods and services used. Compensating balance refers to the minimum balance required to be maintained by the bank in exchange for certain services. Precautionary demand refers to holding cash for unforeseen emergencies, while speculative demand refers to holding cash to take advantage of future investment opportunities.
Learning Objectives
- Learn about the foundations and forms of cash holding demands, such as those for transaction purposes, as a precaution, and for speculation.