Holding money to take care of contingencies is

Step 1: Analyze the question The question asks for the type of demand for money that describes holding cash to cover contingencies, meaning unexpected events or emergencies such as sudden illness, accidents, or urgent repairs.

Step 2: Explain the concept In economics (following Keynes), people hold money for three main motives:

1. Transactions motive: holding money for planned, day-to-day spending, such as transport fare, food, and school fees.
2. Precautionary motive: holding money for unforeseen or emergency situations (contingencies).
3. Speculative motive: holding money to take advantage of future changes in interest rates or the prices of bonds and securities.

"Expansionary motive" is not one of Keynes's motives for holding money. "Expansionary" belongs to policy language, such as expansionary fiscal or monetary policy.

Step 3: Apply to the question

• Contingencies are unexpected events, which matches the precautionary motive.
• Transactions covers known, regular expenses, so it is not the answer.
• Speculative is about profiting from market changes, not emergencies.
• Expansionary is not a motive for holding money.

Step 4: Answer The correct option is A, a precautionary motive.

Exam tip: Link each motive to a keyword:

• Transactions = daily or planned spending
• Precautionary = emergency, unexpected, rainy day
• Speculative = profit, bonds, interest rate changes

If you see "contingencies", "emergencies", or "unforeseen events", think precautionary.