A rise in the rate of interest on financial securities will lead to a movement downward along the money demand curve.

Question

Quizplus · Accepted Answer

A rise in the rate of interest on financial securities causes a decrease in the demand for money, which is represented by a shift to the left of the money demand curve, not a movement along the curve. Movements along the curve are caused by changes in the price level, not changes in interest rates.

A Rise in the Rate of Interest on Financial Securities