The Demand for Reserves Increases as the Price Level Rises

question 9

Multiple Choice

The demand for reserves increases as the price level rises because

• A)people want money to buy goods that will appreciate with inflation.
• B)people need more money to finance transactions.
• C)the opportunity cost of holding money increases.
• D)higher prices reduce the value of dollar assets.

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Definitions:

Equipment

Tools or machines required for a specific task or operation, typically in industry, business, or sports.

Straight-Line Method

A method of calculating depreciation of an asset, which divides the difference between its cost and salvage value by the useful life of the asset.

Resale Value

The estimated value or price at which an asset or item can be sold again in the future.

Equipment

Tangible property used in operations, such as machinery, computer hardware, and vehicles.