The quantity of money demanded
A) is infinite.
B) has no opportunity cost.
C) is the quantity that balances the benefit of holding an additional dollar of money against the opportunity cost of doing so.
D) is directly controlled by the Fed.
E) changes very infrequently.

Question

Quizplus · Accepted Answer

The quantity of money demanded is not infinite but rather depends on the balance between the benefit of having an additional dollar of money and the opportunity cost of holding that money. This balance is subjective and varies between individuals, and is ultimately what determines the demand for money in an economy. The Fed does not directly control the quantity of money demanded, but it can influence it through monetary policy.

The Quantity of Money Demanded