The theory of portfolio choice indicates that factors affecting the demand for money include
A)income.
B)nominal interest rate.
C)liquidity of other assets.
D)all the above.

Question

Quizplus · Accepted Answer

The theory of portfolio choice suggests that the demand for money is influenced by factors such as income (as higher incomes may translate to higher demand for money for transactions), nominal interest rates (as higher rates may incentivize people to hold more bonds and other interest-bearing assets instead of money), and liquidity of other assets (as more liquid assets may divert demand away from money). Thus, all of the above factors affect the demand for money.

The Theory of Portfolio Choice Indicates That Factors Affecting the Demand