The Money Demand Curve

question 11

Multiple Choice

The money demand curve:

• A) slopes downward with respect to the discount rate.
• B) slopes downward with respect to the nominal interest rate.
• C) slopes upward with respect to the nominal interest rate.
• D) always is flat with respect to the nominal interest rate.
• E) is flat with respect to the inflation rate.

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Definitions:

Diversified

The strategy of spreading investments across various financial assets to reduce risk and increase the potential for return.

Open-end Investment Companies

Mutual funds that continuously issue new shares or redeem existing shares at the net asset value.

Mutual Funds

Funds that aggregate capital from numerous investors to acquire a varied collection of shares, bonds, or alternative financial instruments.

12b-1 Fee

A fee found in the expense ratio of some mutual funds, meant to cover marketing, distribution, and other costs.