The following question considers how changes in the interest rate affect the bon
ID: 1184943 • Letter: T
Question
The following question considers how changes in the interest rate affect the bond and money markets. Why is the money demand curve downward sloping in a market in which the interest rate is rising? A. As the interest rate rises, the opportunity cost of holding wealth as bonds rises. B. As the interest rate rises, the opportunity cost of holding wealth as money rises. C. As the interest rate rises, the purchasing power of money falls. D. As the interest rate rises, people will shift their wealth from bonds into money.Explanation / Answer
D. As the interest rate rises, people will shift their wealth from bonds into money.
It is so because
If they invest there money then they will earn more interest which will make them more profitable..!!
Plz.. do rate my answer with 5 star ratings..!!
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.