Keynes argued that the downward slope of the demand for money curve depends on the:
A) equation of exchange.
B) rate of interest.
C) federal funds rate.
D) discount rate.

Question

Quizplus · Accepted Answer

Keynes argued that the downward slope of the demand for money curve depends on the rate of interest. As the interest rate rises, the opportunity cost of holding money increases, prompting people to hold less of it. Conversely, as the interest rate falls, the opportunity cost of holding money decreases, prompting people to hold more of it.

Keynes Argued That the Downward Slope of the Demand for Money