The Demand for Money

question 153

Multiple Choice

The demand for money

• A) is the same as the demand for bonds
• B) is the same as the supply of bonds
• C) increases whenever the price level falls
• D) reflects the constraints that people face
• E) shows the people always demand as much money as possible

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Definitions:

Opportunity Costs

The advantages that a person, business, or investor loses by selecting one option instead of another.

Sunk Costs

Past expenses that have already been incurred and cannot be recovered, and therefore should not affect future business decisions.

Fixed Costs

Fixed costs are business expenses that remain constant regardless of the level of production or sales.

Cost Of Capital

The rate of return that a business needs to generate from its investments in order to cover the cost of raising funds, either through debt or equity.