The money demand curve describes how the quantity of money demanded varies with
A)nominal GDP
B)real GDP
C)the price level
D)the interest rate
E)consumption

Question

Quizplus · Accepted Answer

The money demand curve describes how the quantity of money demanded varies with the interest rate. As interest rates rise, the opportunity cost of holding money increases, reducing the quantity of money demanded. When interest rates fall, the opportunity cost of holding money decreases, increasing the quantity of money demanded.

The Money Demand Curve Describes How the Quantity of Money