The money demand curve, against possible levels of interest rates, has a
A)positive slope.
B)negative slope.
C)zero slope.
D)an infinite slope.
E)positive slope for low levels of money demand, and a negative slope for high levels of money demand.

Question

Quizplus · Accepted Answer

The money demand curve has a negative slope, as individuals will demand less money as interest rates increase. This is because the opportunity cost of holding money increases as interest rates rise, reducing the incentive to hold onto money.

The Money Demand Curve, Against Possible Levels of Interest Rates