The Money Demand Curve Has a Negative Slope Because

question 169

Multiple Choice

The money demand curve has a negative slope because

• A)lower interest rates cause households and firms to switch from money to financial assets.
• B)lower interest rates cause households and firms to switch from financial assets to money.
• C)lower interest rates cause households and firms to switch from money to stocks.
• D)lower interest rates cause households and firms to switch from money to bonds.

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Definitions:

Three-Stage Model

A psychological model that describes memory as consisting of three stages: sensory memory, short-term memory, and long-term memory.

Serial Position Effect

A cognitive phenomenon where an individual is more likely to recall the first and last items in a series better than the middle items.

Psychology

The scientific study of behavior and mental processes.

Retroactive Interference

A memory phenomenon where new information disrupts the recall of previously learned information.