Answer the following questions

(i) Describe the three motives for holding money balances. [3] (ii) Draw the demand for money function and describe the effect on the demand for money function of: (a) a rise in money national income (b) a rise in interest rates (c) a rise in the expected value of the domestic currency. [4] [Total 7]At the end of each year an independent organisation ranks the performance of the unit trusts invested in a particular sector, and classifies them into four quartiles (with quartile 1 being the best performer). Past experience has shown that, at the end of each year, a fund will either remain in the same quartile or will move to a neighbouring quartile. In fact, there is a probability 1-20 that a fund will remain in the same quartile and, where upward or downward movements are both possible, these are equally likely. However, it has been found that a fund that has remained in the top or bottom quartile for two consecutive years has a probability of 1-B (8