How does interest rate affect demand for money 2024?
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If you hold money, your opportunity cost is that income you get from bond or in other words, the interest rate. So, when interest rate increases, you want to hold more bond and less money and vica versa. Thus, money demand and interest rate has an inverse relationship.
2023-05-07 11:15:20
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Ella Brown
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If you hold money, your opportunity cost is that income you get from bond or in other words, the interest rate. So, when interest rate increases, you want to hold more bond and less money and vica versa. Thus, money demand and interest rate has an inverse relationship.
