(2) The precautionary motive: Liquid balances are required to be kept in hand to provide for emergencies like sickness or accident.Everyone likes to keep some money in hand by way of precaution against such contingent liabilities and unforeseen expenses.
(2) The precautionary motive: Liquid balances are required to be kept in hand to provide for emergencies like sickness or accident.Everyone likes to keep some money in hand by way of precaution against such contingent liabilities and unforeseen expenses.Tags: Math Site That Solves ProblemsThe Loved One Evelyn Waugh EssayUndergraduate Dissertation ExamplesKaizen Costing Case StudyStudy Case OshaInternet Chatting Essay
Here, L is liquidity preference (or speculative demand) which is a function of the rate of interest (r) L varies inversely with r. An individual’s preference for liquidity, money, therefore arises because of his uncertainty about the exact point in time when he will need money – the precautionary motive -and his uncertainty about future interest rates – the speculative motive.
Liquidity preference in the Keynesian analysis is therefore largely a function of uncertainty.
Transactions demand and precautionary demand vary directly with the first two factors but speculative demand for money vary inversely with the market rate of interest.
Monetary Equilibrium: Monetary equilibrium occurs when the demand for money equals the supply of money.
Green Banking is mainly formulated for the purpose of bringing paperless banking in banking operations.
This paper explores the glimpse of green banking and it also highlights the various products and services of green banking, list of greenest bank in global level and various initiatives taken by RBI towards green banking.Keynes argued that there are three motives for holding money.First, individuals will demand money to finance their daily purchases of goods and services. Secondly, people will demand money as a contingency against unforeseen expenditures. Thirdly, people will hold money as a store of wealth. In particular, people hold money for speculative purposes because they are unsure about the returns from the alternative financial assets in which they could hold their wealth, i.e., bonds.In fact, the rate of interest does the job of equating the quantity of money demanded to the available supply, i.e., it does the job of producing monetary equilibrium. 3 we see how the rate of interest ensures monetary equilibrium.The money supply is fixed by the central bank at Mo.Bond prices are inversely related to the interest rate and, therefore, if an individual expects a sharp rise in the interest rate, this is the same as expecting a corresponding sharp fall in bond prices and again he will hold only money.Keynes supposed at the aggregate level that individuals hold a wide variety of different views about expected rates of interest in future and therefore as the current rate of interest fell more and more people would expect that eventually it would rise again — the price of bonds would fall — and therefore more people would hold only money.Key Words: Green Banking, Paperless Banking, RBI, Products and Services INTRODUCTION Today we are facing so many problems relating to the environment. Climate change is occurring due to the effect of greenhouse gas; climate change creates global warming.To avoid such a problem now, most of the industries are taking some green initiatives such as the reduction of carbon footprint and energy consumption, investing in eco-friendly projects, etc.The demand for money refers to the desire to hold money in liquid form as an alternative to purchasing income-earning assets like bonds. Keynes calls this desire as “liquidity preference”.Money can be used for any purpose immediately and therefore people desire to hold money either as cash in hand or in the form of readily withdrawable demand deposits in banks. According to Keynes, people hold money for three purposes, viz., transactions, precautionary and speculative.