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:

Coupon Rate

The annual interest rate paid on a bond, expressed as a percentage of the face value, to the bondholders.

Face Value

Face value is the nominal value stated on a financial instrument such as a bond or a stock certificate, important in determining its maturity value or dividend payments.

Required Rate

The minimum expected rate of return on an investment, necessary to compensate for the risk taken.

Floating Rate Bond

A type of bond whose interest payments vary with changes in market interest rates, also known as a floater or variable rate bond.