CameraIcon
CameraIcon
SearchIcon
MyQuestionIcon


Question

If the rate of interest increases, the precautionary demand for money will be .
  1. high
  2. low
  3. zero
  4. the same


Solution

The correct option is B low
If the rate of interest is increases, the precautionary demand for money reduces and will be lower, as the opportunity cost of holding this money is higher.

flag
 Suggest corrections
thumbs-up
 
0 Upvotes



footer-image