a decrease in the interest rate will cause a(n) multiple choice increase in the transactions demand for money. decrease in the transactions demand for money. decrease in the amount of money held as an asset. increase in the amount of money held as an asset.

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30-11-2022
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a decrease in the interest rate will cause a(n) multiple choice increase in the transactions demand for money. decrease in the transactions demand for money. decrease in the amount of money held as an asset. increase in the amount of money held as an asset.

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Bhuvangarg Bhuvangarg · Answer 1 · 2022-12-02T20:22:46+01:00

Consumers spend more when interest rates drop because financing costs less and goods and services are cheaper.Prices rise as a direct result of an increase in demand and consumer spending.

Is money demand increased by a decrease in interest rates?

The amount of money required goes up when the interest rate goes down. The amount of money required at each interest rate is depicted by the demand curve for money. The negative relationship between the amount of money demanded and the interest rate can be seen in its downward slope.

Which effect does a rise in the interest rate have?

The amount of money required goes up when the interest rate goes down. The money demand curve will move to the LEFT if either real GDP or price levels fall. The money demand curve will move to the RIGHT if there is an increase in real GDP or in prices.

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