In the Keynesian model, the demand for money is inversely related to
A) investment.
B) the money supply.
C) the interest rate.
D) the saving rate.

Question

Quizplus · Accepted Answer

According to the Keynesian model, the demand for money is inversely related to the interest rate. As interest rates decrease, individuals and businesses are more likely to hold onto their money instead of investing or lending it out. As a result, the demand for money increases. Conversely, as interest rates increase, the opportunity cost of holding onto money increases, and the demand for money decreases.

In the Keynesian Model, the Demand for Money Is Inversely