Columns (1) and (2) indicate the transactions demand (D_t) for money and columns (1) and (3) show the asset demand (D_a) for money: Refer to the above information.These data suggest that the amount of money that society wishes to hold as an asset: A)varies directly with the interest rate. B)varies inversely with the interest rate. C)varies inversely with the GDP. D)is independent of the interest rate.

Question

Quizplus · Accepted Answer

The data in columns (1) and (3) indicate an inverse relationship between the asset demand for money and the interest rate. As the interest rate increases, the asset demand for money decreases. This suggests that the amount of money that society wishes to hold as an asset varies inversely with the interest rate.

Columns (1) and (2) Indicate the Transactions Demand (Dt) for Money

Columns (1) and (2) Indicate the Transactions Demand (D_t) for Money