Question

The demand for money is downward sloping, because at higher interest rates, a. the opportunity cost of holding money is constant. b. the opportunity cost of holding cash is lower. c. the opportunity cost of holding money is higher. d. the opportunity cost of holding money is decreasing

Answer 1

The demand for money is downward sloping, because at higher interest rates because opportunity cost of holding money is constant

What Is Opportunity Cost?

Opportunity cost is the cost that is given away when a particular products or services is chosen over another.

Opportunity cost could be some benefits that is attached to using a product which will be lost of such product is substituted for another.

Therefore, the demand for money is downward sloping, because at higher interest rates because opportunity cost of holding money is constant.

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