The portfolio theories of money demand state that when income (and therefore,wealth)is higher,the demand for the money asset will ________ and the demand for real money balances will be ________.
A)rise;higher
B)rise;lower
C)fall;higher
D)fall;lower

Question

Quizplus · Accepted Answer

According to portfolio theories of money demand, as income (and thus wealth) increases, individuals are likely to hold a larger portion of their wealth in liquid form (money), leading to a higher demand for the money asset and consequently, a higher demand for real money balances.

The Portfolio Theories of Money Demand State That When Income