Answer the question on the basis of the following table in which columns 1 & 2 i

Question

Answer the question on the basis of the following table in which columns 1 & 2 indicate the transactions demand (Dt) for money and columns 1 & 3 show the asset deman (Da) for money:

The given data suggests that the amount of money that society wishes to hold as an asset:
A.) Varies directly with the interest rate
B.) Varies inversely with the interest rate
C.) Varies inversely with Nominal GDP
D.) is independent of the interest rare

Explanation / Answer

B.) Varies inversely with the interest rate

Decrease in interest rate makes people less interested in depositing money into the banks and due to this their asset demand for money increases. Fall in the interest rate increases the asset demand of money. So, it shows that they are negatively related.

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.