Question

Why speculative demand is horizontal at low interest rate?

Answer 1

Thus, speculative demand for money is very low at high rate of interest. on the contrary, when current rate of interest is low, people expect it to rise in the future i.e. people anticipate a fall in the bond prices resulting into capital losses for bondholders.

Answer 2

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speculative demand for money is very low at high rate of interest. on the contrary, when current rate of interest is low, people expect it to rise in the future i.e. people anticipate a fall in the bond prices resulting into capital losses for bondholders.

Speculative demand is the demand for financial assets, such as securities, money, or foreign currency, that is not dictated by real transactions such as trade or financing. Speculative demand arises from the need for cash to take advantage of investment opportunities that may arise

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