When the Interest Rate Decreases, What Happens to the Opportunity

question 37

Multiple Choice

When the interest rate decreases, what happens to the opportunity cost of holding money and the quantity of money demanded?

• A) The opportunity cost of holding money increases, so the quantity of money demanded increases.
• B) The opportunity cost of holding money increases, so the quantity of money demanded decreases.
• C) The opportunity cost of holding money decreases, so the quantity of money demanded increases.
• D) The opportunity cost of holding money decreases, so the quantity of money demanded decreases.

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Definitions:

Capillaries

The smallest blood vessels in the body's circulatory system, responsible for the exchange of oxygen, carbon dioxide, and other substances between blood and tissues.

Bowman Capsule

A double-layered structure surrounding the glomerulus of each nephron in the kidneys, involved in filtration of blood to form urine.

Urine Flow

The process of elimination of liquid waste from the body through the kidneys, ureters, bladder, and urethra.

Ureter

A pair of tubes that carry urine from the kidneys to the bladder in the urinary tract system.