In Japan,interest rates are close to zero.As a result,Keynesians would argue that money demand
A)has become much more interest rate elastic.
B)will shift upward.
C)has become much less interest rate elastic.
D)will shift downward.
E)will remain unchanged.

Question

Quizplus · Accepted Answer

When interest rates are close to zero, Keynesians argue that money demand becomes much more interest rate elastic because the opportunity cost of holding money (instead of investing it) is very low, making people more sensitive to changes in interest rates.

In Japan,interest Rates Are Close to Zero