Financial innovations can have the effect of
A) only increasing the demand for money.
B) only decreasing the demand for money.
C) increasing the Fedʹs monetary policy.
D) either increasing or decreasing the demand for money depending on what the innovation is.

Question

Quizplus · Accepted Answer

Financial innovations can have varying effects on the demand for money depending on the nature of the innovation. For example, the development of credit cards and electronic payments may decrease the demand for physical currency, while the creation of new investment opportunities may increase the demand for money. Therefore, financial innovations can either increase or decrease the demand for money.

Financial Innovations Can Have the Effect of