Along a downward-sloping money demand schedule,as the interest rate falls
A)the quantity of money demanded falls.
B)the quantity of money demanded rises.
C)real income rises.
D)real income falls.

Question

Quizplus · Accepted Answer

Along a downward-sloping money demand schedule, as the interest rate falls, the opportunity cost of holding money (in terms of foregone interest) decreases, which makes holding money more attractive relative to other assets. As a result, people demand more money, which leads to an increase in the quantity of money demanded.

Along a Downward-Sloping Money Demand Schedule,as the Interest Rate Falls