Speculative demand for money is a:
A) positive function of prices.
B) inverse function of prices.
C) positive function of interest rates.
D) inverse function of interest rates.
E) function of unexpected needs.

Question

Quizplus · Accepted Answer

Speculative demand for money is the demand for money that is held to take advantage of expected future changes in interest rates. As interest rates increase, the opportunity cost of holding money increases, leading to a decrease in speculative demand for money. Therefore, speculative demand for money is an inverse function of interest rates.

Speculative Demand for Money Is A