According to the theory of liquidity preference,if the interest rate rises
A)people want to hold more money.This response is shown by moving to the right along the money demand curve.
B)people want to hold more money.This response is shown by shifting the money demand curve right.
C)people want to hold less money.This response is shown by moving to the left along the money demand curve.
D)people want to hold less money.This response is shown by shifting the money demand curve left.

Question

Quizplus · Accepted Answer

According to the theory of liquidity preference, as the interest rate rises, people prefer to hold less money and more interest-bearing assets, leading to a movement to the left along the money demand curve.

According to the Theory of Liquidity Preference,if the Interest Rate