The normal market demand curve for money is
A)A horizontal curve at very high interest rates,where the quantity demanded changes but the interest rate is constant.
B)An upward-sloping demand curve,where more money is held when interest rates are higher.
C)A vertical demand curve,where the same amount of money is held regardless of the interest rate.
D)A downward-sloping demand curve,where more money is held at lower interest rates.

Question

Quizplus · Accepted Answer

The normal market demand curve for money is downward-sloping, meaning that people hold more money when interest rates are lower. As interest rates decrease, the opportunity cost of holding money decreases, making it more attractive to hold onto money rather than investing it. Therefore, the demand for money increases as interest rates decrease.

The Normal Market Demand Curve for Money Is