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1 year ago

Keynes argued that the downward slope of the demand for money curve depends on the?

Business

1 answer:

Naya [18.7K]1 year ago

6 0

Keynes argued that the downward slope of the demand for money curve depends on the rate of interest.

<h3>What is money curve?</h3>

A vertical curve that depicts the relationship between the supply of money and the interest rate; because the money supply is under the control of the central bank, it is unaffected by changes in the interest rate. The level of income and real GDP, the level of prices, expectations, transfer costs, and preferences are some of the most significant factors that might alter the demand for money.

Because the Fed determines the amount of money that is accessible without taking the value of money into account, the money supply curve is vertical. The downward slope of the money demand curve results from consumers having to carry more cash to make purchases when the cost of goods and services rises as the value of money declines.

Due to the inverse link between the amount of money demanded and the interest rate, the money demand curve has a negative slope. In other words, the interest rate, which stands for the opportunity cost of holding money, causes the money demand curve to slope downward.

The demand curve has a downward slope, which indicates that as the price falls, demand will rise. The demand curve has a decreasing slope since quantity is plotted on the x-axis and price is plotted on the y-axis.

Hence, Keynes argued that the downward slope of the demand for money curve depends on the rate of interest.

To learn more about money curve refer to:

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