Crises that occasionally hit financial markets will increase the demand for money since:

Question

Quizplus · Accepted Answer

Crises in financial markets often lead to a decrease in the perceived reliability or trustworthiness of financial assets, which increases the perceived risk of holding these assets. This relative increase in risk can make holding money, which is generally considered a safe and reliable asset, relatively less risky, leading to an increased demand for money. Therefore, the best choice is D, as it correctly reflects the decrease in risk associated with holding money compared to other financial assets during financial crises.

Crises That Occasionally Hit Financial Markets Will Increase the Demand