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A movement from point B to point C could be the result of
A)a rise in the real interest rate.
B)an increase in the quantity of money held by banks.
C)a fall in the nominal interest rate.
D)a decrease in the total benefit from holding money.
E)a rise in the real interest rate matched by an equal fall in the nominal interest rate.

Question

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A movement from point B to point C could be the result of
A)a rise in the real interest rate. 
B)an increase in the quantity of money held by banks. 
C)a fall in the nominal interest rate. 
D)a decrease in the total benefit from holding money. 
E)a rise in the real interest rate matched by an equal fall in the nominal interest rate.

Quizplus · Accepted Answer

A fall in the nominal interest rate would make holding money more attractive, leading to an increase in the quantity of money demanded, which could cause a movement from point B to point C.

- A Movement from Point B to Point C Could Be