Principles of Macroeconomics / Unit 12 MAC 1108 short lesson, about 20 seconds
The Three Motives
Captions available
The idea
People hold money for three reasons. Transactions demand covers purchases they expect to make. Precautionary demand covers contingencies they cannot date. Speculative demand is held against a fall in asset prices.
In practice
The third explains why expecting bond prices to fall raises money demand.
Where people slip
No one can sort a balance into three piles; the motives are analytical.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
Builds on
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