What does the money demand curve illustrate?
A)the various amounts of money that individuals will hold at different price levels
B)the quantity of bonds that the Bank of Canada will buy at different price levels
C)the various amounts of money that individuals will spend at different levels of GDP
D)the various amounts of money that individuals will hold at different interest rates

Question

Quizplus · Accepted Answer

The money demand curve illustrates the various amounts of money that individuals will hold at different interest rates. As interest rates increase, the opportunity cost of holding money increases and individuals will choose to hold less money, leading to a downward sloping money demand curve.

What Does the Money Demand Curve Illustrate