On a Diagram Wherein the Interest Rate and the Quantity

question 130

Multiple Choice

On a diagram wherein the interest rate and the quantity of money demanded are shown on the vertical and horizontal axes respectively, the asset demand for money can be represented by:

• A)a line parallel to the horizontal axis.
• B)a vertical line.
• C)a downward sloping line or curve from left to right.
• D)an upward sloping line or curve from left to right.

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Definitions:

Interest Expense

The cost incurred by an entity for borrowed funds, usually shown as an expense on the income statement.

Interest-Bearing Note

A debt instrument that pays interest to the holder until maturity.

Note Payable

A written promise to pay a specific amount of money, usually with interest, by a certain date.

Promissory Note

A written promise to pay a specified amount of money on demand or at a definite time.