The motive for holding money to meet unforeseen events is termed

Step 1: Analyze the question The question asks for the name of the motive for holding money to cover unforeseen events, such as sudden illness, accidents, or emergencies.

Step 2: Explain the concept Keynes identified three motives for holding money:

1. Transactions motive: money held for everyday planned spending, such as food, transport, and school fees.
2. Precautionary motive: money held for unexpected needs, such as emergencies, sudden medical bills, or urgent repairs.
3. Speculative motive: money held to take advantage of future changes in interest rates or bond and asset prices.

"Liquidity demand" is a general term for the desire to hold money or liquid assets. It is not one of the three specific motives, and Keynes's liquidity preference theory covers all three.

Step 3: Match the options

• A. Precautionary demand: matches "unforeseen events."
• B. Transactions demand: covers expected, routine spending, so it does not fit.
• C. Liquidity demand: too general, and not the specific motive for emergencies.
• D. Speculative demand: concerns profit from price or interest rate changes, so it does not fit.

Step 4: Answer The correct answer is A. precautionary demand.

Tip: Remember the key words for each motive:

• Transactions = Today's planned spending
• Precaution = Problems or emergencies
• Speculation = Profit from market changes

If you see "unforeseen," "emergency," or "rainy day," think precautionary.