Question

The demand for money is:

a. unlimited, since people want to hold as much money as possible

b. the amount of wealth an individual choose to hold in the form of money

c. limited by the amount of currency printed by the government

d. the amount of income an individual chooses to hold in the form of money

2.The opportunity cost of holding money

a. decreases when the interest rate increases, so people desire to hold more of it

b. decreases when the interest rate increases, so people desire to hold less of it

c. increases when the interest rate increases, so people desire to hold more of it

d. increases when the interest rate increases, so people desire to hold less of it

Answer 1

Solution:

1. The demand for money is - b. the amount of wealth an individual chooses to hold in the form of money.

Explanation- The demand for money is the assets an individuals wish to hold in the form of money. So the demand for money is the amount of wealth an individual chooses to hold in the form of money.

2. The opportunity cost of holding money - no option is correct.

Explanation-  The opportunity cost of holding money decreases when the interest rate decreases, so people desire to hold more of it.