Which of the following statements is/are correct about speculative demand for money?
i. It is Perfectly interest elastic
ii. It is Relatively interest elastic
iii. It is Perfectly interest inelastic
iv. It is Relatively interest inelastic
Show answer & explanation
Correct answer: D
Explanation
The correct answer is Option 4 i.e. Only ii.
Speculative demand for money is generally characterized as: It is relatively interest elastic.
Speculative demand for money refers to the portion of money held by individuals based on expectations of future interest rates. When interest rates are high, individuals are more likely to hold less money and invest in interest-bearing assets, making the speculative demand for money sensitive to changes in interest rates. This makes it relatively interest elastic rather than perfectly elastic or inelastic.