The asset demand for money
A) is unrelated to both the interest rate and the level of GDP.
B) varies inversely with the rate of interest.
C) varies inversely with the level of real GDP.
D) varies directly with the level of nominal GDP.

Question

Quizplus · Accepted Answer

The asset demand for money varies inversely with the rate of interest, meaning that the higher the interest rate, the lower the demand for money as an asset. This is because people are more likely to hold other assets, such as stocks or bonds, when interest rates are high.

The Asset Demand for Money