In October of 2014, the interest rate on money market accounts was about 0.2 percent. In 2007, the interest rate on money market accounts was about 4.0 percent. What has been the impact on money demand from this fall in the interest rate?

Question

Quizplus · Accepted Answer

A decrease in interest rates typically leads to an increase in the quantity of money demanded, as holding money becomes less costly compared to other interest-bearing assets.

In October of 2014, the Interest Rate on Money Market