An increase in the demand for Treasury bills will

Question

Quizplus · Accepted Answer

An increase in demand for Treasury bills indicates that more people want to invest in them. This will result in the price of Treasury bills going up, which in turn will cause the interest rate on Treasury bills to decrease. When the interest rate decreases, people will find holding money less attractive, thus increasing the opportunity cost of holding money vs. Treasury bills. This may eventually cause households to hold less money, but it is not a direct consequence of the increase in demand for Treasury bills.

An Increase in the Demand for Treasury Bills Will