Samia makes $8,000 a month. Samia spends $2,500 on rent and related ho

Samia makes $8,000 a month. Samia spends $2,500 on rent and related household expenses, $500 on food, $200 on clothes, $500 on entertainment and $600 on transportation. She always keeps $200 for things like the car breaking down.

$3,500 is invested in the stock market. Which of the following statements is TRUE?
A) The transactions demand for money is $4,300, the precautionary demand is $200 and the asset demand is $0.
B) The transactions demand for money is $4,300, the precautionary demand is $200 and the asset demand is $3,500.
C) The transactions demand for money is $3,500, the precautionary demand is $200 and the asset demand is $4,300.
D) The transactions demand for money is $4,300, the precautionary demand is $3,500 and the asset demand is $200.

ANSWER

A