Which of the following is a correct description of the money supply and money demand model?
A) The demand curve has a negative slope, and the supply curve is vertical.
B) The demand curve has a negative slope, and the supply curve is horizontal.
C) The demand curve is horizontal, and the supply curve has an upward slope.
D) The demand curve is vertical, and the supply curve has an upward slope.

Question

Quizplus · Accepted Answer

In the money supply and money demand model, the demand curve for money has a negative slope because as the interest rate decreases, the quantity of money demanded increases, and vice versa. The supply curve is vertical, indicating that the supply of money is fixed by the central bank and does not change with the interest rate.

Which of the Following Is a Correct Description of the Money