One factor contributing to the increased instability of money demand is:
A)targeting the federal funds rate.
B)the increased instability of the monetary base.
C)the existence of near monies.
D)more frequent open-market purchases.

Question

Quizplus · Accepted Answer

The existence of near monies, such as money market funds and other types of short-term savings accounts, can make the demand for money more unstable as individuals and businesses may choose to hold these near monies instead of traditional currency depending on interest rates and perceived risk.

One Factor Contributing to the Increased Instability of Money Demand