The quantity of money demanded
A)is infinite.
B)is the quantity that balances the benefit of holding an additional dollar of money against the opportunity cost of doing so.
C)is directly controlled by the Fed.
D)changes very infrequently.
E)has no opportunity cost.

Question

Quizplus · Accepted Answer

The quantity of money demanded is determined by balancing the benefit of holding money for transactions against the opportunity cost, which is the interest foregone by not holding other assets.

The Quantity of Money Demanded