In a two-asset economy with money and T-bills, the quantity of money that people will want to hold, other things being equal, can be expected to:
A)decrease as real GDP increases.
B)increase as the interest rate decreases.
C)increase as the interest rate increases.
D)all of these.

Question

Quizplus · Accepted Answer

As the interest rate decreases, the opportunity cost of holding money decreases, leading people to hold more money.

In a Two-Asset Economy with Money and T-Bills, the Quantity