The motive for holding money that encourages investors to hold bonds when interest rates are low, with the hope of selling them when interest rates are high, is the ?
Correct answer: D. speculation motive
- A. Transactions motive
- B. precautionary motive
- C. profit motive
- D. speculation motive
Explanation
The speculation motive involves choosing between money and bonds based on expected interest-rate movements. Investors hold bonds when rates are low if they expect rates to fall further, or sell them when rates rise, depending on the expected price change.
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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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