The_{--------------------}the nominal interest rate, the_{--------------------}is the quantity of money demanded. A)lower; greater B)higher; greater C)lower; smaller D)more variable; smaller E)None of the above because the nominal interest rate does not influence the quantity of money demanded.

Question

Quizplus · Accepted Answer

The nominal interest rate is the opportunity cost of holding money. When the nominal interest rate is lower, people are more inclined to hold onto money rather than invest it, leading to a greater quantity of money demanded.

The--------------------the Nominal Interest Rate, The--------------------is the Quantity of Money Demanded

The_{--------------------}the Nominal Interest Rate, The_{--------------------}is the Quantity of Money Demanded