The nominal demand for money
A) Does not depend on interest rates.
B) Does not depend on the price level.
C) Is positively related to the price level.
D) Is positively related to the nominal interest rate.

Question

Quizplus · Accepted Answer

The nominal demand for money is the amount of money that people want to hold for transaction purposes. This demand is positively related to the price level because when prices increase, people need more money to conduct their transactions. The nominal interest rate may affect the demand for money, but it is not the primary factor determining it.

The Nominal Demand for Money