According to Keynes liqudity preference theory ( ? ) which is the following not a motived for demand for holding money balances ?

A ) Speculation Motive B ) Precautionary Motive C ) Transaction Motive D ) Finance Motive E ) Basic Motive

Regarding the effects of a tight monetary policy (higher interest rate) which of the following statements is incorrect ?

A ) Households , consumption spending will decline since higher interest rates are likely to decrease the value of households wealth.

B ) For a household that is not a borrower with an initial level of debt , a rate in interest rates is likely to reduce the households interest . and increase its dispesable income.

C ) The funding costs effect suggests that higher interest rates are more likely to slow down firms spending and investments.

D ) Higher interest rates lower the value of firms assets and lower asset prices make firms applications for bank loansmore difficult.

E ) Higher interes rates can draw capital inflows into the domestic economy and lead to a strengtheining of the exchange rate and strengtheining of the exchange rate is likely to affect both costs and revenues of domestic firms,especially those that produce expprts,or those competing with imports.