Which of the following is a feature of the 'Buffer-Stock' theory of money demand?
A. Individuals hold money as a buffer against unforeseen fluctuations in income and expenditure
B. Only the transactions motive matters and uncertainty is irrelevant
C. Money is held only for speculative purposes
D. Money demand is independent of uncertainty
Answer: Option A
Solution (By JKSSB Mock Tests)
Buffer-stock models emphasise that money balances serve as a short-run shock absorber, allowing agents to smooth consumption in the face of transitory income or expenditure shocks.
Explanation:
The Solow-Swan neoclassical growth model shows that long-run growth in per capita income is driven primarily by exogenous technological progress.
Explanation:
A Voluntary Export Restraint (VER) is a non-tariff barrier under which an exporting country agrees to limit the quantity of exports to a particular country.
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