If a change in government regulations allows banks to start paying interest on checking accounts, this will:
A) increase the demand for money.
B) decrease the demand for money.
C) have no effect on the demand for money.
D) increase the demand for currency but decrease the demand for checking accounts.

Question

Quizplus · Accepted Answer

Allowing banks to pay interest on checking accounts would make them more attractive to consumers as a place to hold their money. This would increase the demand for money overall, as people would be more willing to keep money in their checking accounts rather than withdrawing and holding it as cash.

If a Change in Government Regulations Allows Banks to Start