asked 193k views
1 vote
14. The total quantity of money demanded is determined by:A. Subtracting the asset demand for money from the transactions demand for moneyB. Adding the transactions demand for money to the asset demand for moneyC. Subtracting the transactions demand for money from nominal GDPD. Adding the asset demand for money to nominal GDP

1 Answer

6 votes

The total quantity of money demanded is determined by adding the transactions demand for money to the asset demand for money. This is option B.What is Money Demand?The amount of money an individual or an economy requires to buy goods or services is known as money demand. Money demand is affected by interest rates, inflation, and GDP. The total quantity of money demanded is determined by the transactions demand for money plus the asset demand for money.Asset Demand for MoneyThe desire for people to hold money as an asset is referred to as the asset demand for money. When interest rates rise, people's desire to hold money as an asset declines. When interest rates are low, people are more likely to keep their wealth in liquid assets rather than long-term ones.Transaction Demand for MoneyThe desire for money for daily transactions is referred to as transaction demand for money. The transaction demand for money increases as the economy expands, and vice versa. A rise in real GDP leads to an increase in the transaction demand for money.

answered
User Cagrias
by
8.0k points
Welcome to Qamnty — a place to ask, share, and grow together. Join our community and get real answers from real people.