People tend to hold more money as the rate of inflation ___ and as the level of income ___.

Name: People tend to hold more money as the rate of inflation ___ and as the level of income ___.
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Question

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People tend to hold more money as the rate of inflation rises because the purchasing power of money decreases, leading them to need more money for transactions. Similarly, as the level of income rises, individuals have more money to spend and thus hold more money for transactions and precautionary reasons.

People Tend to Hold More Money as the Rate of Inflation