Suppose that Canadian banks did not offer interest on chequing accounts until the beginning of the 1980s.If subsequent banking regulations changed,allowing banks to pay interest on chequing account funds,the _____ money _____ and shifted the money demand curve to the _____.

Question

Quizplus · Accepted Answer

If banks started paying interest on chequing accounts, it would increase the demand for money since people would now be willing to hold more funds in their chequing accounts to earn interest. This would shift the money demand curve to the right. The supply of money would not be affected by this change.

Suppose That Canadian Banks Did Not Offer Interest on Chequing