When the Money Market Is Depicted in a Diagram with the Value

question 178

Multiple Choice

When the money market is depicted in a diagram with the value of money on the vertical axis, which statement best describes the money demand function?

• A) It slopes upward because at higher prices people want to hold more money.
• B) It slopes downward because at higher prices people want to hold more money.
• C) It slopes downward because at higher price people want to hold less money.
• D) It slopes upward because at higher prices people want to hold less money.

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Definitions:

Better Off

A condition in which an individual or group's situation improves in terms of economic welfare, happiness, or other measures of well-being.

Present Value

The current value of a future sum of money or stream of cash flows, given a specified rate of return.

Interest Rate

The percentage of a sum of money charged for its use, often expressed on an annual basis.

Payment

The transfer of money or goods from one party to another in exchange for goods, services, or to fulfill a legal obligation.