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Question 12 (1 point) The transactions demand for money is least likely to be a function of the price level. interest rate. level of national income. frequency of wage and salary payments Question 13 (1 point) If the quantity of money demanded exceeds the quantity supplied the supply-of-money curve will shift to the left the demand-for-money curve will shift to the right. the interest rate will rise. the interest rate will fall.
12. Transaction demand for money is a function OF INTEREST RATE
As interest rates rise, people are more inclined to keep their money in banks than to have it with them. The decrease in demand for money is a result of the higher interest rates.
13. If the amount of money required is greater than that which has been provided, THE INTEREST RATES WOULD GO UP.
We all know that economics’ basic law states that if there is more demand than supply, the price for the good will go up. The interest rate is the price at which money is demanded. The interest rate rises when there is more money needed than the economy can provide. This gives people more incentive to keep their money in banks. The demand for money decreases until it equals the supply.