Which of the Following Explains Why the Demand for Money

question 79

Multiple Choice

Which of the following explains why the demand for money curve has an inverse relationship between the interest rates and the quantity of money demanded?

• A) As the interest rate rises, the opportunity cost of holding money rises, and people respond by converting cash or checking account balances into interest-bearing financial investments.
• B) As the interest rate rises, people find it advantageous to borrow money, which increases the quantity of money demanded.
• C) As the interest rate falls, the opportunity cost of holding money rises, and people respond by converting cash or checking account balances into interest-bearing financial investments.
• D) As the interest rate rises, the demand for money curve shifts outward to the right.

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Definitions:

Ending merchandise inventory

The final value of goods available for sale at the end of an accounting period, calculated as beginning inventory plus purchases minus cost of goods sold.

Inventory costing method

An accounting methodology used to value inventory and determine the cost of goods sold, such as FIFO (First-In, First-Out) or LIFO (Last-In, First-Out).

Ending inventory

The value of goods available for sale at the end of an accounting period, a crucial component for calculating the cost of goods sold (COGS).

Earliest costs

This term is not standard in financial terminology; it may refer to historical costs, which are the original monetary value of an economic item.