Explain the reason for holding money and change in the interest influence on holding money.

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 14, Problem 1CQ

To determine

Explain the reason for holding money and change in the interest influence on holding money.

Expert Solution & Answer

Explanation of Solution

Money is considered as the medium of exchange for goods and services. The important reasons for people holding money are for precautionary motive, transaction motive, and the speculative motive. In the money market, there is an inverse relationship that occurs between the interest rate and quantity demand for money. When other things remain constant, a high-interest rate will cause to increase the opportunity cost of holding money, and people decrease their speculative equilibrium. Therefore, if the interest rate increases, people will hold less amount of money.

Economics Concept Introduction

Transaction motive: The transaction motive explains that people hold money to meet their day-to-day expenses is referred to as transaction motive.

Precautionary motive: The precautionary motive explains that people demand money as a safeguard against an uncertain future, such as medical bills, accidents, immediate payments, and so on.

Speculative motive: The speculative motive explains that people hold money to take advantage of unexpected opportunities; for example, gambling.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

Discuss the preferred deterrent method employed by the Zambian government to combat tax evasion, monetary fines. As noted in the reading the potential penalty for corporate tax evasion is a fine of 52.5% of the amount evaded plus interest assessed at 5% annually along with a possibility of jail time. In general, monetary fines as a deterrent are preferred to blacklisting of company directors, revoking business operation licenses, or calling for prison sentences. Do you agree with this preference? Should companies that are guilty of tax evasion face something more severe than a monetary fine? Something less severe? Should the fine and interest amount be set at a different rate? If so at why? Provide support and rationale for your responses.

answer

Discuss the preferred deterrent method employed by the Zambian government to combat tax evasion, monetary fines. As noted in the reading the potential penalty for corporate tax evasion is a fine of 52.5% of the amount evaded plus interest assessed at 5% annually along with a possibility of jail time. In general, monetary fines as a deterrent are preferred to blacklisting of company directors, revoking business operation licenses, or calling for prison sentences. Do you agree with this preference? Should companies that are guilty of tax evasion face something more severe than a monetary fine? Something less severe? Should the fine and interest amount be set at a different rate? If so at why? Provide support and rationale for your responses.

Answer 2

Question

Chapter 14, Problem 1CQ

To determine

Explain the reason for holding money and change in the interest influence on holding money.

Expert Solution & Answer

Explanation of Solution

Money is considered as the medium of exchange for goods and services. The important reasons for people holding money are for precautionary motive, transaction motive, and the speculative motive. In the money market, there is an inverse relationship that occurs between the interest rate and quantity demand for money. When other things remain constant, a high-interest rate will cause to increase the opportunity cost of holding money, and people decrease their speculative equilibrium. Therefore, if the interest rate increases, people will hold less amount of money.

Economics Concept Introduction

Transaction motive: The transaction motive explains that people hold money to meet their day-to-day expenses is referred to as transaction motive.

Precautionary motive: The precautionary motive explains that people demand money as a safeguard against an uncertain future, such as medical bills, accidents, immediate payments, and so on.

Speculative motive: The speculative motive explains that people hold money to take advantage of unexpected opportunities; for example, gambling.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 14, Problem 1CQ

To determine

Explain the reason for holding money and change in the interest influence on holding money.

Expert Solution & Answer

Explanation of Solution

Money is considered as the medium of exchange for goods and services. The important reasons for people holding money are for precautionary motive, transaction motive, and the speculative motive. In the money market, there is an inverse relationship that occurs between the interest rate and quantity demand for money. When other things remain constant, a high-interest rate will cause to increase the opportunity cost of holding money, and people decrease their speculative equilibrium. Therefore, if the interest rate increases, people will hold less amount of money.

Economics Concept Introduction

Transaction motive: The transaction motive explains that people hold money to meet their day-to-day expenses is referred to as transaction motive.

Precautionary motive: The precautionary motive explains that people demand money as a safeguard against an uncertain future, such as medical bills, accidents, immediate payments, and so on.

Speculative motive: The speculative motive explains that people hold money to take advantage of unexpected opportunities; for example, gambling.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 14, Problem 1CQ

To determine

Explain the reason for holding money and change in the interest influence on holding money.

Expert Solution & Answer

Explanation of Solution

Money is considered as the medium of exchange for goods and services. The important reasons for people holding money are for precautionary motive, transaction motive, and the speculative motive. In the money market, there is an inverse relationship that occurs between the interest rate and quantity demand for money. When other things remain constant, a high-interest rate will cause to increase the opportunity cost of holding money, and people decrease their speculative equilibrium. Therefore, if the interest rate increases, people will hold less amount of money.

Economics Concept Introduction

Transaction motive: The transaction motive explains that people hold money to meet their day-to-day expenses is referred to as transaction motive.

Precautionary motive: The precautionary motive explains that people demand money as a safeguard against an uncertain future, such as medical bills, accidents, immediate payments, and so on.

Speculative motive: The speculative motive explains that people hold money to take advantage of unexpected opportunities; for example, gambling.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 14, Problem 1CQ

To determine

Explain the reason for holding money and change in the interest influence on holding money.

Expert Solution & Answer

Explanation of Solution

Money is considered as the medium of exchange for goods and services. The important reasons for people holding money are for precautionary motive, transaction motive, and the speculative motive. In the money market, there is an inverse relationship that occurs between the interest rate and quantity demand for money. When other things remain constant, a high-interest rate will cause to increase the opportunity cost of holding money, and people decrease their speculative equilibrium. Therefore, if the interest rate increases, people will hold less amount of money.

Economics Concept Introduction

Transaction motive: The transaction motive explains that people hold money to meet their day-to-day expenses is referred to as transaction motive.

Precautionary motive: The precautionary motive explains that people demand money as a safeguard against an uncertain future, such as medical bills, accidents, immediate payments, and so on.

Speculative motive: The speculative motive explains that people hold money to take advantage of unexpected opportunities; for example, gambling.

Answer 6

Chapter 14, Problem 1CQ

To determine

Explain the reason for holding money and change in the interest influence on holding money.

Expert Solution & Answer

Explanation of Solution

Money is considered as the medium of exchange for goods and services. The important reasons for people holding money are for precautionary motive, transaction motive, and the speculative motive. In the money market, there is an inverse relationship that occurs between the interest rate and quantity demand for money. When other things remain constant, a high-interest rate will cause to increase the opportunity cost of holding money, and people decrease their speculative equilibrium. Therefore, if the interest rate increases, people will hold less amount of money.

Economics Concept Introduction

Transaction motive: The transaction motive explains that people hold money to meet their day-to-day expenses is referred to as transaction motive.

Precautionary motive: The precautionary motive explains that people demand money as a safeguard against an uncertain future, such as medical bills, accidents, immediate payments, and so on.

Speculative motive: The speculative motive explains that people hold money to take advantage of unexpected opportunities; for example, gambling.

Answer 7

Chapter 14, Problem 1CQ

To determine

Explain the reason for holding money and change in the interest influence on holding money.

Answer 8

Expert Solution & Answer

Explanation of Solution

Money is considered as the medium of exchange for goods and services. The important reasons for people holding money are for precautionary motive, transaction motive, and the speculative motive. In the money market, there is an inverse relationship that occurs between the interest rate and quantity demand for money. When other things remain constant, a high-interest rate will cause to increase the opportunity cost of holding money, and people decrease their speculative equilibrium. Therefore, if the interest rate increases, people will hold less amount of money.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Economics Concept Introduction

Transaction motive: The transaction motive explains that people hold money to meet their day-to-day expenses is referred to as transaction motive.

Precautionary motive: The precautionary motive explains that people demand money as a safeguard against an uncertain future, such as medical bills, accidents, immediate payments, and so on.

Speculative motive: The speculative motive explains that people hold money to take advantage of unexpected opportunities; for example, gambling.

Answer 12

Ch. 14 - Prob. 1CQ Ch. 14 - Prob. 2CQ Ch. 14 - Prob. 3CQ Ch. 14 - Prob. 4CQ Ch. 14 - Prob. 5CQ Ch. 14 - Prob. 6CQ Ch. 14 - Prob. 7CQ Ch. 14 - Prob. 8CQ Ch. 14 - Prob. 9CQ Ch. 14 - Prob. 10CQ

Explain the reason for holding money and change in the interest influence on holding money.

Explain the reason for holding money and change in the interest influence on holding money.

Explanation of Solution

Want to see more full solutions like this?

Chapter 14 Solutions