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Three Motives For Holding Money

Peoples hold money/ cash for the three (3) following reasons/ 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, pay rent, to invest on business etc.


2. Speculative Motive

Some hold money 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.


3. Precautionary Motive

Future is always uncertain, so everybody maintain a cash balance for the future uncertainty. Increase of business or individuals, all’s future is uncertain, so they keep cash to meet the future uncertainty.

Speculative Money Motive

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7 comments:

  1. Thank u so much

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

    ReplyDelete
  3. Expand more on the Speculative Motive

    ReplyDelete
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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.

    Regards,
    Sharon, essay writer

    ReplyDelete
  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!

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

    ReplyDelete

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