In a graph of a money demand curve, _____ is plotted on the vertical axis.
A)the interest rate on liquid assets such as short-term CDs
B)the interest rate on 30-year Treasury bills
C)the rate of inflation
D)the rate of return in the stock market

Question

Quizplus · Accepted Answer

The interest rate on liquid assets such as short-term CDs is plotted on the vertical axis in a graph of a money demand curve. This is because the money demand curve represents the relationship between the quantity of money demanded and the interest rate on liquid assets. As the interest rate on these assets increases, the quantity of money demanded decreases, and vice versa.

In a Graph of a Money Demand Curve, _____ Is