Which of the following will most likely cause a decrease in the quantity of money demanded?
A) an increase in the price level
B) an increase in the interest rate
C) an increase in nominal income
D) a decrease in the interest rate

Question

Quizplus · Accepted Answer

An increase in the interest rate will make it more expensive to borrow money, leading to a decrease in the quantity of money demanded. The other choices suggest an increase in demand for money - an increase in the price level means people need more money to buy goods and services, an increase in nominal income means people have more money to spend, and a decrease in the interest rate makes it cheaper to borrow money, leading to an increase in the quantity of money demanded.

Which of the Following Will Most Likely Cause a Decrease