Question

According to Keynes, the speculative demand for money is due to __________.

• A. money is better store of value than any other long term financial assets
• B. higher returns on speculative activities
• C. general tendency to speculate to make quick return
• D. all the three

Answer 1

Answer: (A)

money is better store of value than any other long term financial assets

According to J.M. Keynes, Money has speculative demand due to its function as a better store of value than any other long tern financial asset because of the following two reasons:

(i) Money in not perishable as it does not have any age, its is not time bounded and does not gets old which makes it a better store of value.

(ii) The rate of money does not change with time as in case of securities and bonds. The value of the currency remains intact even if there is fluctuations in the money market which makes it the best store of value.