The theory of portfolio choice indicates that factors affecting the demand for money include
A)income.
B)nominal interest rate.
C)riskiness of money.
D)all the above.

Question

Quizplus · Accepted Answer

The theory of portfolio choice suggests that individuals make decisions about how to allocate their wealth among different assets, including money. This allocation is influenced by a variety of factors, including income (which affects the overall amount of wealth available to invest), the nominal interest rate (which affects the opportunity cost of holding money versus other assets), and the riskiness of money (which can affect the perceived safety of holding money versus other investments). Therefore, all of the factors listed in the question (income, nominal interest rate, and riskiness of money) can affect the demand for money, according to this theory.

The Theory of Portfolio Choice Indicates That Factors Affecting the Demand