Which of the following factors would affect a person's demand to hold money? Check all that...

Which of the following factors would affect a person's demand to hold money? Check all that apply.

A) The availability of ATM machines

B) Income level

C) Federal Reserve mandates

D) The value of money

Solutions

Expert Solution

The factors affecting a person’s demand to hold money are

The availability of ATC machines, this is because when there are more machines, an individual can easily withdraw money whenever he wants, so he will hold less money in this case.

Income level will also affect the demand to hold money because an individual whose income is more, his expenditure will be more, so he will hold more money in hand, for meeting his expenditure.

The value of money will also affect the demand for money to hold because when price level is lower, value of money will be more because it can purchase more goods and services. On the other hand, when price level is higher, value of money will be less because it can purchase less goods and services. Hence an individual will hold more money in case of lower money value and vice-versa.

The Federal Reserve Mandates will not affect a person’s demand to hold money.

Hence option A, B and D are the correct answer.

Rahul Sunny answered 1 year ago

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