Financial innovations can have the effect of
A) only decreasing the demand for money.
B) only increasing the demand for money.
C) either increasing or decreasing the demand for money depending on what the innovation is.
D) increasing the Fed's monetary policy.

Question

Quizplus · Accepted Answer

Financial innovations can affect the demand for money in various ways depending on their nature. Some innovations might make transactions more efficient, reducing the need for holding money (decreasing demand), while others might increase the attractiveness of holding money or create new uses for money, thus increasing demand.

Financial Innovations Can Have the Effect of