If the rate of interest is high, the precautionary demand for money will be:

High

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Low

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Independent of interest rates

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Cannot be determined

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Solution

The correct option is B
Low

If the rate of interest is high, the precautionary demand for money will be low as the opportunity cost of holding this money is higher.

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Q. When interest rates are high, speculative demand for money is .

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If the rate of interest is high, the precautionary demand for money will be:

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

The correct option is B
Low

If the rate of interest is high, the precautionary demand for money will be low as the opportunity cost of holding this money is higher.