Question : Which of the following statements is/are correct about speculative demand for money?
i. It is a Perfectly interesting elastic.
ii. It is Relatively interest-elastic.
iii. It is Perfectly interest inelastic.
iv. It is Relatively interest inelastic.
Option 1: Only iii and iv
Option 2: Only iii
Option 3: Only i and ii
Option 4: Only ii
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Correct Answer: Only ii
Solution : The correct answer is Only ii .
The correct statement about speculative demand for money is that it is relatively interest-elastic. Speculative demand for money tends to be relatively interest-elastic because expectations about future interest rate movements influence it. When individuals and businesses expect interest rates to rise, they may reduce their speculative demand for money and instead prefer interest-bearing assets.
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