The demand for money is ________ related to the nominal interest rate.
A) positively
B) negatively
C) not
D) None of the above answers is correct because the relationship between the demand for money and the nominal interest rate changes with the inflation rate.

Question

Quizplus · Accepted Answer

The demand for money is negatively related to the nominal interest rate because as interest rates increase, the opportunity cost of holding money (which earns no interest) increases, leading people to hold less of it in favor of interest-bearing assets.

The Demand for Money Is ________ Related to the Nominal