According to the liquidity preference theory
A) There is a precautionary motive for holding money
B) There is a speculative motive for holding money
C) There is a transaction motive for holding money
D) All of the above
E) None of the above

Question

Quizplus · Accepted Answer

The liquidity preference theory, proposed by John Maynard Keynes, suggests that people prefer to hold their wealth in liquid form for three main reasons: the transaction motive (needing money for daily transactions), the precautionary motive (holding money for unexpected expenses), and the speculative motive (holding money to take advantage of future investment opportunities). Thus, all of the options A, B, and C are correct.

According to the Liquidity Preference Theory