A line depicting the relationship between the quantity of money demanded and the interest rate is
A)negatively sloped.
B)positively sloped.
C)horizontal.
D)vertical.
E)horizontal at high interest rates and vertical at low interest rates.

Question

Quizplus · Accepted Answer

The quantity of money demanded and the interest rate have an inverse relationship. When the interest rate increases, the opportunity cost of holding money increases, leading to a decrease in the quantity of money demanded, and vice versa. Therefore, the line depicting their relationship is negatively sloped.

A Line Depicting the Relationship Between the Quantity of Money