A decrease in the rate of interest would:
A)decrease the opportunity cost of holding money.
B)increase the transactions demand for money.
C)increase the asset demand for money.
D)decrease the price of bonds.

Question

Quizplus · Accepted Answer

A decrease in the rate of interest reduces the opportunity cost of holding money because the foregone interest from not investing in interest-bearing assets is lower.

A Decrease in the Rate of Interest Would