Money is demanded for which of the following reasons?
ECONOMICS
WAEC 2001
Money is demanded for which of the following reasons?
- A. to meet unforseen contigencies
- B. to solve the problem of inflation
- C. it is easily divisible
- D. it is portable
Correct Answer: A. to meet unforseen contigencies
Explanation
Money held to cater for unforeseen circumstances is referred to as the precautionary demand for money. In this case, money is kept for use in a contingency. That is, people maintain sufficient cash balance to act as a cushion or buffer against unexpected events.
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