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Why does speculative demand for money arise?

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Question

Why does speculative demand for money arise?

Options

  • Only the Maturity Period of bonds

  • Expectations about future interest rates and bond prices

  • Only the Coupon Rate of bonds

  • Only the Face Value of bonds

MCQ
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Solution

Speculative demand for money arises from expectations about future interest rates and bond prices. These expectations influence whether people hold money or bonds.

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