Columns (1) and (2) Indicate the Transactions Demand (D_t) for Money

question 160

Multiple Choice

Columns (1) and (2) indicate the transactions demand (D_t) for money and columns (1) and (3) show the asset demand (D_a) for money: Refer to the above information.These data suggest that the amount of money demanded for transactions purposes:

• A)varies directly with the interest rate.
• B)varies inversely with the interest rate.
• C)varies inversely with the GDP.
• D)is independent of the interest rate.

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Definitions:

Sales Discounts

A reduction in the price of goods or services offered by a seller to encourage prompt payment by the buyer.