The money-demand curve is downward-sloping because:
A)people will want to hold less money as the interest rate falls
B)people will want to hold more money as the interest rate falls
C)interest rates rise as the Reserve Bank reduces the quantity of money demanded
D)interest rates fall as the Reserve Bank reduces the supply of money

Question

Quizplus · Accepted Answer

As the interest rate falls, the opportunity cost of holding money decreases, making people willing to hold more money. This results in a higher demand for money and a downward-sloping money-demand curve.

The Money-Demand Curve Is Downward-Sloping Because