Javier has been thinking about purchasing a bond but is afraid that the bond will lose value. He has decided to hold money instead. This is known as a. transactions demand for money. b. precautionary demand for money. c. money balance demand for money. d. asset demand for money.

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Caixiayang201 Caixiayang201

19-04-2022
Business

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Javier has been thinking about purchasing a bond but is afraid that the bond will lose value. He has decided to hold money instead. This is known as a. transactions demand for money. b. precautionary demand for money. c. money balance demand for money. d. asset demand for money.

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Tundexi Tundexi · Answer 1 · 2022-04-28T11:26:09+02:00

An example of a precautionary demand for money is when Javier decided to hold money rather then purchasing a bond but is afraid that the bond will lose value.

What is a precautionary demand?

This is a holding motive that involves an act of holding real balances of money for use in a contingency or unforeseen circumstance in the future.

Hence, this demand is used when he decides to hold money rather then purchasing a bond but is afraid that the bond will lose value.

Therefore, the Option D is correct.

Read more about precautionary demand

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