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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


Team Careers360 19th Jan, 2024
Answer (1)
Team Careers360 22nd Jan, 2024

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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