When the money market is drawn with the value of money on the vertical axis,the money demand curve slopes
A)upward,because at higher prices people want to hold more money.
B)downward,because at higher prices people want to hold more money.
C)downward,because at higher price people want to hold less money.
D)upward,because at higher prices people want to hold less money.

Question

Quizplus · Accepted Answer

The money demand curve slopes downward because at higher prices, people want to hold less money. This is because higher prices decrease the purchasing power of money, making each unit of money worth less, so people need more money to buy the same amount of goods and services. Therefore, when prices rise, people want to hold less money and when prices fall, people want to hold more money.

When the Money Market Is Drawn with the Value of Money