Question

Which of the following will cause an increase in the amount of money that one wishes to hold?

1) Increase in income
2) Decrease in expenses
3) Increase in savings
4) All of the above

Answer 1

An increase in income and an increase in savings will cause an increase in the amount of money an individual wishes to hold. The desire to hold money is typically influenced by the potential for future purchases and the precautionary motive for savings.

Step-by-step explanation:

The question asked pertains to the factors that would cause an increase in the amount of money one wishes to hold. Analyzing the options provided:

1. An increase in income often leads to a higher desire to hold money for various reasons, including precautionary motives or the desire to make future purchases.
2. A decrease in expenses might temporarily allow for more money to be retained, but this doesn't inherently increase the desire to hold onto more money than usual.
3. An increase in savings indicates a higher inclination to put money aside for future use, and therefore, an increase in the desire to hold money.

In summary, both an increase in income and an increase in savings typically lead to an increased desire to hold money. A decrease in expenses doesn't necessarily result in a higher desire to hold money and is not included in the typical motivations for increased money holding.