- CFA Exams
- CFA Level I Exam
- Study Session 5. Economics (2)
- Reading 16. Monetary and Fiscal Policy
- Subject 2. The Demand for and Supply of Money
CFA Practice Question
Which type of demand for money is not directly linked to GDP?
A. Transactions-related
B. Precautionary
C. Speculative
Explanation: Both transactions-related balances and precautionary balances will tend to rise with the volume and value of transactions in the economy and GDP as well.
User Contributed Comments 1
| User | Comment |
|---|---|
| NickGerli | I take issue with the phrase "directly linked" in the question. If the answer states that transactions and precautionary balances "tends to rise with the volume and value of...GDP", that doesn't sound like a very direct relationship. Transactions balances is the only one that is directly related in my interpretation, because of the MV=PY relationship. |