When the money market is drawn with the value of money on the vertical axis,
A)money demand slopes upward and money supply is horizontal.
B)money demand slopes downward and money supply is horizontal.
C)money demand slopes upward and money supply is vertical.
D)money demand slopes downward and money supply is vertical.

Question

Quizplus · Accepted Answer

In the money market, money demand typically slopes downward because as the value of money (or interest rate) increases, people hold less money. Money supply is vertical because it is fixed by the central bank and does not change with the interest rate.

When the Money Market Is Drawn with the Value of Money