Money demand depends on
A)the price level and the interest rate.
B)the price level but not the interest rate.
C)the interest rate but not the price level.
D)neither the price level nor the interest rate.

Question

Quizplus · Accepted Answer

The demand for money is influenced by both the price level and the interest rate. The higher the price level, the more money people need to carry out transactions. The higher the interest rate, the more expensive it is to borrow money, leading to a decrease in demand for money. Therefore, money demand is affected by both factors.

Money Demand Depends on