The demand for money is ________ related to the nominal interest rate.
A) positively
B) negatively
C) not related
D) None of the above answers is correct because the relationship between the demand for money and the interest rate varies with the inflation rate.

Question

Quizplus · Accepted Answer

The demand for money is negatively related to the nominal interest rate because as interest rates increase, the opportunity cost of holding money (instead of investing it) increases, leading to a decrease in the quantity of money demanded.

The Demand for Money Is ________ Related to the Nominal