If a change in government regulations allows banks to start paying interest on chequing accounts, this will:
A)increase the demand for money.
B)decrease the demand for money.
C)have no effect on the demand for money.
D)increase the demand for currency but decrease the demand for chequing accounts.

Question

Quizplus · Accepted Answer

If banks start paying interest on chequing accounts, people will be more likely to hold their money in chequing accounts rather than in currency or other non-interest-bearing accounts. This will increase the demand for money.

If a Change in Government Regulations Allows Banks to Start