The amount of real money people want to hold will increase if either the amount they are spending increases or the
A)price level increases.
B)price level decreases.
C)interest rate decreases.
D)interest rate increases.
E)price of bond falls.

Question

Quizplus · Accepted Answer

The amount of real money people want to hold increases when the interest rate decreases because lower interest rates make holding money more attractive compared to investing in interest-bearing assets. Higher spending also increases the demand for real money for transactions.

The Amount of Real Money People Want to Hold Will