The question was quite popular with the candidates. Many of them attempted it. The question required the candidates to explain
(i) supply of money;
(H) value of money in the first part.
The second part of the question required the candidates to highlight the three
motives for holding money.
The overall performance of the candidates in the question was fair. Many lost valuable marks because they failed to adequately explain their points. Some misinterpreted the question and wrote on the functions of money.
Nevertheless, the good candidates who scored high marks stated that
(1) Supply of money refers to the total volume of money available to the country for use in connection with economic activities. It includes the total currency, demand deposits and other forms of monetary media.
(2) Value of money refers to the purchasing power of money i.e quantity of goods and services a given sum of money can buy.
They also explained the three motives of holding money as follows:
(1) Transaction - Demand for money to meet day-to-day transactions such as purchases of food, clothing books, etc.
(2) Speculative - Demand for money to take advantage of the changes in interest rates.
(3) Precautionary - Demand for money to take care of unforeseen contingencies.
