Final answer:
The statement is false; people hold money for transactions, precautionary, and speculative motives, not just speculative. The transactions motive involves regular purchases, precautionary for emergencies, and speculative to benefit from future investments. Money also serves as a store of value.
Step-by-step explanation:
The statement that people hold money primarily for the speculative motive is False. There are actually several reasons why people hold money, with the speculative motive being only one of them. The main motives for holding money are the transactions motive, the precautionary motive, and the speculative motive. The transactions motive refers to holding money to make purchases and day-to-day transactions. The precautionary motive is holding money for unexpected expenses or financial emergencies. Lastly, the speculative motive involves holding money to take advantage of future investments, anticipating changes in interest rates or market conditions that might make it advantageous to hold onto cash and then use it to purchase financial assets like stocks, bonds, or real estate when prices are favorable.
Holding money as a store of value is also crucial because it allows individuals to preserve wealth and transfer purchasing power into the future. Inflation can erode the value of money over time, but it still serves as a generally accepted medium of exchange and a way to save value for future use. Therefore, while making purchases is an important reason for holding money, it is not the only reason, and not specifically the so-called speculative motive.