When the interest rate is considered higher than normal,the speculative demand for money ________,the transaction demand ________.

Question

Quizplus · Accepted Answer

When interest rates are higher than normal, the speculative demand for money decreases because people prefer to invest in interest-bearing assets rather than hold cash. Conversely, the transaction demand for money increases because higher interest rates often indicate a growing economy where more money is needed for transactions.

When the Interest Rate Is Considered Higher Than Normal,the Speculative