Get premium membership and access revision papers with marking schemes, video lessons and live classes.

Processing. Please wait.

Factors that determine the amount of money held in the precautionary motive

Answer Text:
Factors that determine the amount of money held in the precautionary motive :
Level of income- the higher the income the higher the amount of money held for precautionary motive.
-Family status- high class families tend to hold more money for precautionary motive than low class families.
-Age of the individual- the aged tend to hold more money for precautionary motive than the young since they have more uncertainties than the young.
- Number of dependents- the more the dependents one has, the more the money they are likely to hold for precautionary motive.
-Individual‟s temperament- pessimists tend to hold more money for precautionary motives than the optimists because they normally think things will go wrong.
-Duration between incomes- those who earn money after a short time are likely to keep less
money than those who earn money after a long time.