Which of the following statements best explains why the money demand curve slopesdownward?Select one:O a. At high interest rates, the opportunity cost of holding money is low, so people wantto hold more.O b. As GDP increases, the demand for money tends to decrease, resulting in anegatively sloped curve.At low interest rates, the opportunity cost of holding money is low, so people wantto hold more.O d. At high interest rates, people want to hold more money, so they don't have toborrow to make purchases.

Demand for money refers to the amount of money an individual wish to hold. Demand for money curve is…

Which of the following statements best explains why the money demand curve slopes downward? Select one: O a. At high interest rates, the opportunity cost of holding money is low, so people wan to hold more.

Which of the following statements best explains why the money demand curve slopes downward? Select one: O a. At high interest rates, the opportunity cost of holding money is low, so people wan to hold more.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Required Reserve and Excess Reserve Analysis

A required reserve is an amount of cash that banks must keep with themselves, which is certain percentage of the deposits made by their customers. Required reserve is a percentage of the bank's deposits that the respective bank must have on each overnight. The percentage rate is set and determined by the nation’s central bank. It is important to have such funds accumulated to meet its uncertain obligations, sudden liabilities and withdrawals. Required reserve is also known as reserve ratio. Reserve ratio is an important tool to control the money supply.

Question

Which of the following statements best explains why the money demand curve slopes
downward?
Select one:
O a. At high interest rates, the opportunity cost of holding money is low, so people want
to hold more.
O b. As GDP increases, the demand for money tends to decrease, resulting in a
negatively sloped curve.
At low interest rates, the opportunity cost of holding money is low, so people want
to hold more.
O d. At high interest rates, people want to hold more money, so they don't have to
borrow to make purchases.

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