According to Liquidity-Preference Theory, Why Is the Money-Demand Curve Downward

question 76

Multiple Choice

According to liquidity-preference theory, why is the money-demand curve downward sloping?

• A) because interest rates rise as the Bank of Canada reduces the quantity of money demanded
• B) because interest rates fall as the Bank of Canada reduces the supply of money
• C) because people will want to hold less money as the cost of doing so falls
• D) because people will want to hold more money as the cost of doing so falls

---

Definitions:

Consumer-To-Marketer

A communication flow direction where consumers provide feedback or information directly to companies or marketers.

Electronic Dialog

A digital conversation or exchange of information through electronic means, such as email or messaging apps.

Informed Decisions

Choices made based on a thorough understanding of the relevant information, data, and knowledge.

Online Environment

The digital space where interactions, transactions, and communications occur over internet platforms and networks.