Movements Along a Money Demand Curve Reflect the Effects of Changes

question 98

Multiple Choice

Movements along a money demand curve reflect the effects of changes in the:

• A)price level on the quantity of money demanded.
• B)interest rate on the demand for money.
• C)real exchange rate on the demand for money.
• D)interest rate on the quantity of money demanded.
• E)potential GDP on the quantity of money demanded.

---

Definitions:

Interest Rate

The proportion, in a percentage, at which interest is paid by borrowers for the use of money that they borrow from a lender. It is a critical component of the credit markets.

Years

A unit of time equal to 365 days (or 366 days in a leap year), used in calendar timekeeping.

Present Value

The value right now of a sum of money expected in the future or a sequence of cash inflows, factoring in a specific rate of return.

Discount Rate

This is the rate of interest utilized in the process of discounted cash flow analysis to calculate the current value of future cash flows.