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Question

If someone keeps some money for bad days, this demand for money is known by_________ motive of money.

A
speculative
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B
transaction
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C
precautionary
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D
store
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Solution

The correct option is B precautionary
Precautionary motive of money refers to the demand for money to store it for future uncertainties. In other words, if money is demanded so that it can be kept for bad days then the demand of such money is known by the precautionary motive of money. In such cases, money functions as the store of value.

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