Velocity Wanted: Reasons for Money Hoarding
The Theory by Goliath . For the sake of convenience, we copy from somewhere else: (Quote) (i) The Income-motive . –One reason for holding cash is to bridge the interval between the receipt of income and its disbursement. … (ii) The Business-motive . –Similarly, cash is held to bridge the time of incurring business costs and that of the sale-proceeds …. (iii) The Precautionary motive . –To provide for contingencies requiring sudden expenditure and for unforeseen opportunities of advantageous purchases …. (iv) There remains the Speculative-motive . … [Experience] indicates that the aggregate demand for money to satisfy the speculative-motive usually shows a continuous response to gradual changes in the rate of interest…. (Unquote) First of all, the first two are of the same nature, and often named collectively as “the Transactional motive.” After ...