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Three Motives For Holding Money

Peoples hold money/ cash for the three (3) following reasons or motives:

1. Transaction Motive

Peoples keep cash for the transaction motive. Everybody maintains cash balance to meet the daily transaction to pay to creditor, to buy goods and services, pay rent and to invest on business etc.

2. Speculative Motive

Some people hold money for the speculation purpose. Speculator always searches the project to invest money temporarily so that makes huge profit immediately. A speculator always maintains a cash balance to get the speculation benefits and outcomes.

  1. The Demand For Money.
  2. The Effects Of Inflation.

3. Precautionary Motive

We all know that the future is always uncertain. So everybody hold money and maintain a cash balance for the future uncertainty. Increase of business or individuals, all’s future is really uncertain, so they keep cash to meet the future uncertainty risks to overcome.

reason for holding cash

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  1. Thank u so much

  2. its actually a question, explain the factors that affects money demand.

  3. Expand more on the Speculative Motive

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  5. Sharon H. Matteson13 June, 2013

    Thanks for enumerating the three motives for holding money. For me, it is important to have an emergency money so that if everything unexpected happens, you will be financially prepared.

    Sharon, essay writer

  6. I am really impressed with this share! Whether we agree or not there is no one whose one of the main concerns isn't money. Your post on three motives for holding money could really bring some interesting facts. Keep sharing your thoughts!

  7. what are th reasons behind of people to holding mony


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