When the Nominal Interest Rate Rises, the Quantity of Money

question 16

Multiple Choice

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

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

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