The quantity demanded of money is
A) inversely related to the interest rate.
B) directly related to the interest rate.
C) inversely related to the general price level.
D) inversely related to GDP.
E) a,c,and d

Question

Quizplus · Accepted Answer

The quantity demanded of money is the amount of money people are willing to hold at a given interest rate. As the interest rate increases, the opportunity cost of holding money also increases, causing people to demand less money (or withdraw funds for investing). Therefore, there is an inverse relationship between the quantity demanded of money and the interest rate.

The Quantity Demanded of Money Is