A decrease in the interest rate, other things being equal, causes
A) an upward movement along the demand curve for money.
B) a downward movement along the demand curve for money.
C) a rightward shift of the demand curve for money.
D) a leftward shift of the demand curve for money.

Question

Quizplus · Accepted Answer

When interest rates decrease, the opportunity cost of holding money decreases and individuals and firms will want to hold more money. This results in a downward movement along the demand curve for money as the quantity demanded of money increases.

A Decrease in the Interest Rate, Other Things Being Equal