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  1. The Transaction Motive
  2. The Precautionary Motive
  3. The Speculative Motive

The Transaction Motive

People will keep certain stock of money all the time to enable them to carry out their transactions.

The Precautionary Motive

The people also desire to hold some additional cash balances against unforeseen circumstances.

The Speculative Motive

The Speculative Motive implies the desire on the part of the public to keep certain amount of cash in reserve to make speculative gains out of the purchase and sale of securities.

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