An increase in which of the following variables will cause a decrease in money demand in the current period?
A) The expected future nominal interest rate.
B) The expected future income.
C) The current income.
D) The current nominal interest rate.
E) The current real interest rate.

Question

Quizplus · Accepted Answer

An increase in the current nominal interest rate makes holding money less attractive compared to interest-bearing assets, thus decreasing money demand.

An Increase in Which of the Following Variables Will Cause