If interest rates rise, there will be a(n):
A) increase in the total amount of money demanded.
B) decrease in the total amount of money demanded.
C) decrease in the total amount of money supplied.
D) increase in the asset demand for money.

Question

Quizplus · Accepted Answer

When interest rates rise, the opportunity cost of holding money increases, leading to a decrease in the total amount of money demanded as people prefer to invest in interest-bearing assets.

If Interest Rates Rise, There Will Be A(n)