If Banks Start Paying Higher Interest Rates on Checking Accounts

question 140

Multiple Choice

If banks start paying higher interest rates on checking accounts, we would expect, assuming everything else held equal,

• A)the demand for money to become more sensitive to changes in the interest rate.
• B)the demand for money to become horizontal.
• C)the relationship between interest rates and the demand for money to be unaffected.
• D)the demand for money to become less sensitive to changes in the interest rate.
• E)a decrease in the supply of money.

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