Ceteris paribus, the relationship between the brokerage fee and the demand for real money balances is which of the following?

Question

Quizplus · Accepted Answer

The brokerage fee is the cost of buying or selling a security. The demand for real money balances is the amount of money that people want to hold in their wallets and bank accounts. Ceteris paribus, if the brokerage fee increases, then the demand for real money balances will decrease. This is because people will want to hold less money in their wallets and bank accounts in order to avoid paying the higher brokerage fee.

Ceteris Paribus, the Relationship Between the Brokerage Fee and the Demand