An increase in the rate of interest would increase

Name: An increase in the rate of interest would increase
Brand: Quizplus
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Question

Quizplus · Accepted Answer

An increase in the rate of interest would make holding money less attractive because it would be more profitable to invest that money elsewhere, hence increasing the opportunity cost of holding money. This would lead to a decrease in the demand for money and an increase in the demand for other assets like bonds, which would reduce their price. Therefore, options B, C, and D are incorrect.

An Increase in the Rate of Interest Would Increase