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.

---

Definitions:

Affiliation

The relationship or connection between individuals or groups, often implying a sense of belonging or association with a particular community or organization.

Dominance

Dominance refers to the state or condition of being in control or commanding influence over others, often observed within social or hierarchal structures.

Achievement

The successful accomplishment of a task or goal, often recognized by some form of reward or acknowledgment.

Alfred Kinsey

An American biologist and sexologist who is known for his research into human sexuality in the mid-20th century, including the Kinsey Reports.