When interest rate rise, other things equal, we can expect the quantity of real money holding to ?
Correct answer: A. fall
- A. fall
- B. increase
- C. not change
- D. None of these
Explanation
A higher interest rate raises the opportunity cost of holding non-interest-bearing money, so people reduce their real money balances, other things being equal.
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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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