The ________ the nominal interest rate, the ________ is the quantity of money demanded.
A) lower; greater
B) lower; smaller
C) higher; greater
D) more variable; smaller
E) None of the above because the nominal interest rate does not influence the quantity of money demanded.

Question

Quizplus · Accepted Answer

The lower the nominal interest rate, the greater is the quantity of money demanded because people prefer to hold more money when the opportunity cost of holding money (the interest foregone) is lower.

The ________ the Nominal Interest Rate, the ________ Is the Quantity

The the Nominal Interest Rate, the Is the Quantity