Why do people desire to hold money?

All of the above

The correct answer is Option 4: All of the above

People desire to hold money for several reasons, which include:

• For Transaction Motive: Money is held to facilitate daily transactions such as purchasing goods and services. It is needed to manage and make payments for regular expenses.

• For Speculative Motive: People may hold money to take advantage of potential investment opportunities when interest rates are favorable or when they anticipate changes in market conditions that might affect asset prices.

• For Precautionary Motive: Money is held as a safeguard against unexpected expenses or emergencies. Having liquid assets available provides financial security and the ability to handle unforeseen circumstances.

Therefore, all three motives—transactional, speculative, and precautionary—drive the desire to hold money.