Which Basic Principle of Economics Best Explains Why the Demand

question 50

Multiple Choice

Which basic principle of economics best explains why the demand for money is negatively related to the nominal interest rate?

• A) the principle of diminishing returns
• B) the principle of voluntary exchange
• C) the principle of opportunity cost
• D) the marginal principle

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Definitions:

Marginal Benefit

The added utility or pleasure that comes from the consumption of one more unit of a good or service.

Marginal Cost

The escalation in aggregate cost linked to the fabrication of an extra item of a good or service.

Free Products

Products that are provided to consumers without monetary charge, often used as a business strategy to attract users or customers.

Firms

Businesses or enterprises that engage in commercial, industrial, or professional activities, whether for profit or not.