Asked by
Leeah Thompson
on Nov 11, 2024
Verified
Which one of these statements is correct?
A) The lower the interest rate,the higher the opportunity cost of holding assets in the form of money.
B) The quantity of money supplied is independent of the interest rate.
C) The larger the supply of money,the higher the interest rate,all things equal.
D) Travelers checks and government bonds are equally liquid assets.
E) The demand for money increases whenever the price level decreases.
Liquid Assets
Assets that can quickly and easily be converted into cash without significant loss in value.
Interest Rate
The percentage of a loan that is applied as interest for the borrower, usually expressed as an annual rate of the remaining loan balance.
Money Supplied
A rephrased definition: The total volume of money provided or injected into the economy by various sources, including but not limited to monetary authorities.
- Identify the correlation between interest rates and the demand for money.
- Distinguish the variables that influence the equilibrium of money supply and demand in the economy.
Verified Answer
BC
Learning Objectives
- Identify the correlation between interest rates and the demand for money.
- Distinguish the variables that influence the equilibrium of money supply and demand in the economy.