56. The transaction demand for money is A. negatively related to income. B. unre

Question

56. The transaction demand for money is A. negatively related to income. B. unrelated to the interest rate. positively related to interest rate. D. negatively related to interest rate. 57. motoreycles in 2010. The company sold 8 in 2010 and added 4 A company produced 12 to its What is the value of this company's o A, 84,000 B.$8,000 $12.000 D.$16,00 inventories. The market value of the motorcycles in 2010 was $1,000 per unit. utput that will be included in the 2010 GDP? 57. 58, If the Fed sets the money supply the interest rate, then the money supply curve is vertical. A. as directly related to 58. as independent of C. identical to D. as inversely related to 59. At higher interest rates the 59. _C A. money supply is higher. B quantity of money demanded is higher. quantity of money demanded is lower. D. money supply is indeterminate. 60. When you keep your savings in a safety deposit bax, you are using money as a(n) 60. store of value. B. unit of account. C. Rocket Fuel

Explanation / Answer

Question 56 :

Transaction demand of money is a component of overall demand for money . It mainly includes demand for liquid form of money like cash and checking account balances . Transaction demand for money depends on three things : 1)interest rate , 2) aggregate income , 3) price level . Interest rate is the opportunity cost of holding money . It is negatively related to transaction demand . If volume of income rises , people start to make more transactions . Hence transaction demand rises . If price rises , then people will need to hold a higher level of money balances to meet their payments transactions .

So here the correct answer is : D) Negatively related to the interest rate .

Related Questions

Navigate

• Browse (All)
• Browse 5
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.