When the Interest Rate Rises, the Quantity of Money Demanded

question 266

Multiple Choice

When the interest rate rises, the quantity of money demanded decreases because

• A) people move funds from interest- bearing assets into money.
• B) the price level also rises and people decrease their demand for money.
• C) people will buy fewer goods and hold less money.
• D) people shift funds from money holdings to interest- bearing assets.

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Definitions:

Special Or Unusual Items

Items in financial statements that are unusual due to their nature or infrequency, and which can significantly affect net income.

Inventory Method Change

A change in the accounting method used to value inventory, which can significantly affect a company's financial statements and tax liability.

LIFO

Last In, First Out; an inventory valuation method where the last items placed in inventory are the first ones considered sold.

Retrospective Approach

A method used in accounting to apply new accounting policies to transactions, other events, and conditions as if the new policy had always been in place.