Question

The demand for money, according to Keynes, is for which of the following?

• A. Speculative motive
• B. Transaction motive
• C. Precautionary motive
• D. All the above motives

Answer 1

The correct option is D All the above motives

Keynes in his theory of demand for money, first considers the liquidity preference- how much of the assets people want to hold in terms of money. After that the motives for which they demand money are transaction (as a medium for exchange), precautionary (provision for contingency) and speculative (predicting future losses/profits).