When the Nominal Interest Rate Rises, the Quantity of Money

question 422

Multiple Choice

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

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

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