Which of the Following Is Correct

question 223

Multiple Choice

Which of the following is correct?

• A)The asset demand for money is downward sloping because the opportunity cost of holding money declines as the interest rate rises.
• B)The asset demand for money is downward sloping because the opportunity cost of holding money increases as the interest rate rises.
• C)The transactions demand for money is downward sloping because the opportunity cost of holding money varies inversely with the interest rate.
• D)The asset demand for money is downward sloping because bond prices and the interest rate are directly related.

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Definitions:

Marginal Revenue

The additional revenue gained from selling one more unit of a good or service.

Marginal Product

The additional output resulting from employing one more unit of a particular input, keeping other inputs constant.

Optimal Employment

The level of employment where the marginal product of labor equals the real wage rate, maximizing efficiency and productivity in the use of labor resources.

Marginal Product

The additional output resulting from using one more unit of a production input, keeping all other inputs constant.