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The precautionary demand for money is the demand for money: a. to cover unexpected events. b. for normal transactions purposes. c. to protect against inflation. d. for normal investment purposes. e. for special stock purchases.

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beritop1089

Answer:

a. to cover unexpected events.

Explanation:

One of the reasons why someone would want to hold cash in his/her portfolio is for precautionary purposes. It is where "emergency" fund was derived .The motive for holding such a cash is to cover unexpected events or expenses like a blocked drainage, car breakdown or unexpected medical emergency. Other motives for demanding cash is to cover normal transactions or to use during speculated events like recessions.

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