The quantity of money demanded is _____ the interest rate.
A) the opportunity cost of
B) independent of
C) positively related to
D) inversely related to

Question

The quantity of money demanded is _____ the interest rate. 
A) the opportunity cost of
B) independent of
C) positively related to
D) inversely related to

Quizplus · Accepted Answer

The quantity of money demanded is inversely related to the interest rate. As the interest rate increases, the opportunity cost of holding money increases, causing people to demand less money. Conversely, as the interest rate decreases, the opportunity cost of holding money decreases, causing people to demand more money.

The Quantity of Money Demanded Is _____ the Interest Rate