Generally speaking, the greater the amount of financial wealth people hold in the form of near-monies, the: A) greater is their willingness to spend out of their money incomes, B) less is their willingness to spend out of their money incomes, C) greater is the transactions demand for money, D) less is the asset demand for money
To determine the correct answer to the question, let's break down the options and understand the concepts involved:
A) Greater is their willingness to spend out of their money incomes: This option suggests that when people have a larger amount of near-monies (financial assets that are easily convertible into money), they will be more willing to spend money from their income. However, this is not necessarily true. People's willingness to spend depends on various factors, such as their income level, preferences, and economic circumstances. Therefore, this option does not provide a direct relationship to near-monies.
B) Less is their willingness to spend out of their money incomes: This option suggests that when people have more near-monies, their willingness to spend money from their income decreases. Similar to the previous option, this doesn't provide a direct relationship between near-monies and spending behavior.
C) Greater is the transactions demand for money: The transactions demand for money refers to the need for money to make everyday transactions, such as buying goods and services. When people have a higher amount of financial wealth in near-monies, they may have a greater need for money to carry out these transactions. This is because near-monies are not as readily accepted for transactions as actual money is. Therefore, this option seems plausible.
D) Less is the asset demand for money: The asset demand for money refers to the desire to hold money as an asset for its own sake, beyond the needs for transactions. When people have more near-monies, they may rely less on holding money as an asset because they already have other easily convertible financial assets. Therefore, this option also appears reasonable.
Considering the explanations above, the correct answer to the question is most likely either C) greater is the transactions demand for money or D) less is the asset demand for money. To determine the exact answer, it would be helpful to refer to relevant economic theories or empirical studies.