Assume That the Demand for Money Depends on the Interest

question 4

Multiple Choice

Assume that the demand for money depends on the interest rate. A decrease in the money supply will cause

• A) the interest rate to increase, the quantity demanded of money to decrease, and the velocity of money to decrease.
• B) the interest rate to increase, the quantity demanded of money to decrease, and the velocity of money to increase.
• C) the interest rate to decrease, the quantity demanded of money to decrease, and the velocity of money to increase.
• D) the interest rate to decrease, the quantity demanded of money to increase, and the velocity of money to decrease.

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