When the money demand curve is drawn with interest rate on the vertical axis and the quantity of money on the horizontal axis, the slope of the demand curve for money is

Question

Quizplus · Accepted Answer

The slope of the demand curve for money is negative. As the interest rate increases, the opportunity cost of holding money increases and people will demand less money. As the interest rate decreases, the opportunity cost of holding money decreases and people will demand more money. Therefore, the demand curve for money has a negative slope.

When the Money Demand Curve Is Drawn with Interest Rate