In the ATM model, if the nominal interest rate declines, then the
A)number of days between visits to the ATM and the quantity of money demanded both rise.
B)number of days between visits to the ATM and the quantity of money demanded both fall.
C)number of days between visits to the ATM rises and the quantity of money demanded falls.
D)number of days between visits to the ATM falls and the quantity of money demanded rises.

Question

Quizplus · Accepted Answer

When the nominal interest rate declines, the opportunity cost of holding money decreases, leading people to hold more money and visit the ATM less frequently, increasing the number of days between visits.

In the ATM Model, If the Nominal Interest Rate Declines