The money demand curve,with the interest rate on the vertical axis,has a
A)positive slope.
B)negative slope.
C)zero slope.
D)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 generally has a negative slope which signifies that as the interest rate increases, individuals and firms would want to hold less money, and vice versa. This inverse relationship is due to the opportunity cost of holding money, as higher interest rates mean that the cost of forgoing interest income by holding money instead of other assets or investments also increases.

The Money Demand Curve,with the Interest Rate on the Vertical