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Practice mode Money, Interest Rates And Output

What relationship does the demand for money represent?

Correct answer C. A negative relationship between the interest rate and the quantity of money demanded

Explanation

Because higher interest rates raise the cost of holding non-interest-bearing money, people hold less money as the interest rate rises, giving a downward-sloping demand curve.

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Question 04 Money, Interest Rates And Output

If the investment demand curve is vertical, how effective are monetary and fiscal policy?

Correct answer B. Monetary policy is ineffective but fiscal policy is effective

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