Question

The asset demand for money:
A. is unrelated to both the interest rate and the level of GDP.
B. Correct varies inversely with the rate of interest.
C. varies inversely with the level of real GDP.
D. varies directly with the level of nominal GDP.

Answer 1

The demand for money from assets is B. Correct fluctuates inversely with interest rate.

What is the money demand?

The total amount of money that a country's population wants to own is the amount of demand for money. The desire for a particular amount of money is justified by the necessity for money. The quantity of money that people desire to keep varies depending on how much needs to be managed in terms of transactions. The top three reasons to hold cash as opposed to bonds, equities, or other sorts of financial asset classes are as follows:Transaction-based motivation: People desire money on a daily basis to pay bills and support their discretionary spending, A basis for prevention, as an unforeseen need usually arises A speculative justification if they anticipate an increase in such money's worth relative to other asset classes.

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