In October of 2012,the interest rate on money market accounts was about 0.4 percent. In 2007,the interest rate on money market accounts was about 4.0 percent. What has been the impact on the demand for money curve from this fall in the interest rate?

Question

Quizplus · Accepted Answer

A fall in the interest rate leads to a downward movement along the demand for money curve, as people are more willing to hold money when the opportunity cost of holding it (the interest rate) is lower.

In October of 2012,the Interest Rate on Money Market Accounts