Identify motives for demand of money, factors determining money demanded by traders, define money demand/supply, and list unethical business practices.

14. Identify each motive for demand of money described below. (3 mks) a. To cater for emergencies – Precautionary motive b. To cater for daily expenses such as food – Transactions motive c. To invest so as to earn interest – Speculative motive 15. State four factors that determine the amount of money demanded by a trader. (4 mks) i. Level of income/sales: Higher income or sales generally lead to a higher demand for money for transactions. ii. Interest rates: Higher interest rates on alternative assets may reduce the demand for holding money. iii. Price level: Higher prices for goods and services increase the amount of money needed for transactions. iv. Frequency of income receipts: Less frequent income receipts may lead to holding more money. v. Availability of credit: Easy access to credit may reduce the need to hold large money balances. (Any four) 16. Define the following terms. (4 mks) a. Demand for money: The desire by individuals and businesses to hold money in liquid form rather than investing it in assets. b. Supply of money: The total amount of currency and other liquid assets in an economy at a particular time. c. Money balances: The amount of money that individuals or firms hold in their accounts or as cash at any given time. 17. State four unethical practices in business transactions. (4 mks) i. Bribery: Offering or accepting something of value to influence a decision. ii. Fraud: Deceiving others for personal gain, such as false advertising or misrepresentation. iii. Insider trading: Using confidential information for personal financial advantage. iv. Price fixing: Colluding with competitors to set prices at an artificial level. v. Exploitation of labor: Underpaying workers, unsafe working conditions, or child labor. vi. Environmental damage: Disregarding environmental regulations for profit. (Any four) That's 2 down. 3 left today — send the next one.