Podcast
Questions and Answers
When a consumer holds money to meet spending needs, this is an example of the:
When a consumer holds money to meet spending needs, this is an example of the:
A decrease in the rate of interest would:
A decrease in the rate of interest would:
The transactions demand for money will shift to the:
The transactions demand for money will shift to the:
The asset demand for money:
The asset demand for money:
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Which of the following is correct:
Which of the following is correct:
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Study Notes
Demand for Money
- When a consumer holds money to meet spending needs, this is an example of the transactions demand for money.
Effect of Interest Rate on Demand for Money
- A decrease in the rate of interest would increase the asset demand for money, shifting the asset demand curve to the right.
Shift in Transactions Demand
- The transactions demand for money will shift to the right if consumers expect prices to rise in the future, as they would want to hold more money now to make purchases before prices increase.
Asset Demand for Money
- The asset demand for money is the desire to hold money as a store of value, rather than for transactions purposes.
Correct Statement
- The correct statement is that the demand for money is influenced by both transactions and asset motives.
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Description
Test your knowledge of money demand and interest rates with this quiz. Choose the correct option for scenarios related to the use of money, transactions demand, asset demand, and the impact of interest rate changes.
