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Macroeconomics

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The Money Market: Money Demand

MACRO-MC1PBG

Which of the following is the correct reason why the money demand curve is downward sloping?

A

Higher interest rates are associated with a higher opportunity cost of holding money.

B

Higher interest rates are associated with a lower opportunity cost of holding money.

C

Lower interest rates are associated with a higher opportunity cost of holding money.

D

People dislike holding money and would rather give it to the banks.