The money demand curve has a:
A)negative slope.
B)positive slope.
C)zero slope and is perfectly elastic.
D)positive slope for low levels of money demand and a negative slope for high levels of money demand.

Question

Quizplus · Accepted Answer

The money demand curve is downward sloping or negative sloping because as the interest rate increases, the cost of holding money (or the opportunity cost of not investing in interest-bearing assets) increases, leading individuals to hold less money. Therefore, there is an inverse relationship between the interest rate and the quantity of money demanded.

The Money Demand Curve Has A