The aggregate real money demand schedule L(R, Y) slopes upward because a fall in

Question

The aggregate real money demand schedule L(R, Y) slopes upward because a fall in the interest rate raises the desired real money holdings of each household and firm in the economy. slopes downward because a fall in the interest rate reduces the desired real money holdings of each household and firm in the economy has a zero slope because a fall in the interest rate keeps constant the desired real money holdings of each household and firm in the economy. slopes downward because a fall in the interest rate raises the desired real money holdings of each household and firm in the economy. slopes downward because a rise in the interest rate makes consumers less focused on the liquidity of their assets.

Explanation / Answer

The aggregate demand curve of money slopes downward because as the rate of interest falls, the returns on holding bonds or other financial instrument falls which results in more demand for rela money holdings or in in the form of cash.

Thus, Option D.

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