QuestionAugust 11, 2025

People forgo interest and hold money: A) because they are required to. B) to reduce their transaction costs. C) because there are no substitutes for money. D) because banks are too risky.

People forgo interest and hold money: A) because they are required to. B) to reduce their transaction costs. C) because there are no substitutes for money. D) because banks are too risky.
People forgo interest and hold money:
A) because they are required to.
B) to reduce their transaction costs.
C) because there are no substitutes for money.
D) because banks are too risky.

Solution
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Answer

B) to reduce their transaction costs. Explanation 1. Identify the reason for holding money People hold money primarily to facilitate transactions and reduce transaction costs, as it is more convenient than frequently converting other assets into cash.

Explanation

1. Identify the reason for holding money<br /> People hold money primarily to facilitate transactions and reduce transaction costs, as it is more convenient than frequently converting other assets into cash.
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