Which of the following is an example of the assetasset demand for money?

(a) marianne uses money in her checking account to buy groceries every week. marianne uses money in her checking account to buy groceries every week.
(b) joan believes that gold is an excellent store of value.
(c) since the stock market has been volatile lately comma jean holds most of her savings in a bank account. since the stock market has been volatile lately, jean holds most of her savings in a bank account.
(d) carla keeps $ 2,000 in a bank account in case of emergencies. carla keeps $2,000 in a bank account in case of emergencies.

(D) Carla keeps $ 2,000 in a bank account in case of emergencies.

Explanation:

In general, we could say that money have these necessary functions on the economy:

1) Money is a medium of exchange

2) Money is a measure of value

3) Money is a store of value

Depending upon the functions above, there will be appearing of the demand for the money. Now, there are 2 types of demand for money:

1) Transactional Demand- is the keeping the money for purchasing. It means you always need some money to conduct your transactions as well. So we could say that, a medium of exchange function of money coincides with this demand type.

2) Asset Demand-is something about keeping the money as a financial asset or creating a store of value for later use. So the liquidity of the money is very essential for this type of demand. Additionally, measure of value and store of value functions will be the characteristics of this type of demand.

In the option A, the point is about purchasing so it is transaction demand. In the option B, there is not any talking about storing the money, but even if he stores the money as gold investment, it will not be liquidity meaning that is why not the asset demand because the prices and values of gold will be changed easily according to the currency. In the option C, the case is about the stocks so there is volatility and the volume of the money will be very volatile and this cannot be considered as an asset. However, in the option D, there is money on the bank account just the store of cash and it could be used as an asset on emergent moments.

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