Holding money as a medium of exchange to make payments is known as precautionary demand. Hence, option C is correct.
The precautionary need for money is the practice of maintaining actual cash amounts for usage in crises. Since receipts and payments cannot be predicted with 100% certainty, people maintain precautionary balances to lessen the possibility of loss stemming from a contingency.
Money is commonly sought for as protection against the future's uncertainty. Unexpected bills for services like medical or auto repairs frequently require immediate payment. The need to have cash on hand in such situations is the precautionary reason for asking for money.
Thus, option C is correct.
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