When the Interest Rate Increases, How Do the Opportunity Cost

question 73

Multiple Choice

When the interest rate increases, how do the opportunity cost of holding money and the quantity of money demanded change?

• A) The opportunity cost of holding money increases, so the quantity of money demanded increases.
• B) The opportunity cost of holding money increases, so the quantity of money demanded decreases.
• C) The opportunity cost of holding money decreases, so the quantity of money demanded increases.
• D) The opportunity cost of holding money decreases, so the quantity of money demanded decreases.

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