which of the following increases the demand for money? choose 1 answer: a a higher price level b a higher…
which of the following increases the demand for money? choose 1 answer: a a higher price level b a higher nominal interest rate c the central bank lowers the discount rate d a lower nominal interest rate e the central bank buys bonds
Answer
Brief Explanations:
When the price level is higher, people need more money to buy the same amount of goods and services, thus increasing the demand for money. A higher nominal interest rate makes holding money less attractive as it has an opportunity - cost in terms of foregone interest, reducing money demand. When the central bank lowers the discount rate or buys bonds, it increases the money supply rather than demand.
Answer:
A. a higher price level