The demand for money curve slopes downward because a rise in the nominal interest rate_{--------------------} the opportunity cost of holding money and therefore_{--------------------} the quantity of money demanded. A)decreases; increases B)increases; decreases C)increases; does not change D)increases; increases E)decreases; decreases

Question

Quizplus · Accepted Answer

A rise in the nominal interest rate increases the opportunity cost of holding money, leading to a decrease in the quantity of money demanded.

The Demand for Money Curve Slopes Downward Because a Rise