The higher the interest rate, the larger will be the amount of money demanded for transaction purposes.

Name: The higher the interest rate, the larger will be the amount of money demanded for transaction purposes.
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Question

Quizplus · Accepted Answer

Higher interest rates make holding money more expensive (due to the opportunity cost of not earning interest), so people and businesses are likely to reduce the amount of money they hold for transaction purposes.

The Higher the Interest Rate, the Larger Will Be the Amount