The demand for money is depicted by a curve downward sloping curve because if the interest rate falls,the opportunity cost of holding assets in the form of money decreases.

Question

Quizplus · Accepted Answer

The demand for money curve is downward sloping because individuals and firms will demand more money as the interest rate falls, as the opportunity cost of holding money decreases. This is because holding money rather than other assets becomes relatively more attractive as the interest rate decreases.

The Demand for Money Is Depicted by a Curve Downward