Real Money Demand Depends

question 52

Multiple Choice

Real money demand depends

• A) positively on the inflation rate.
• B) positively on the consumer's savings rate.
• C) positively on the nominal interest rate.
• D) negatively on the inflation rate.
• E) negatively on the nominal interest rate.

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Definitions:

Compounded Monthly

Interest calculated on the initial principal and also on the accumulated interest of previous periods, with the process happening every month.

Compounded Semi-annually

Interest calculated on the initial principal, which also includes all of the accumulated interest from previous periods, applied twice a year.

Equivalent Cash

A term typically used to describe a sum of money that has the same value as another form of financial instrument or asset.

Compounded Semi-annually

Involves the calculation and addition of interest to the principal sum twice per year.