Respuesta :
The true statement is that: There is an inverse relationship between the quantity of money demanded and the interest rate.
In economics, money can be defined as any asset used by an individual or business entity to make purchases of goods and services at a specific period of time.
Simply stated, money refers to any asset which can be used to purchase goods and services by customers.
This ultimately implies that, money is any recognized economic unit that is generally accepted as a medium of exchange for goods and services, as well as repayment of debts such as loans, taxes across the world.
An interest rate can be defined as an amount of money that is charged as a percentage of the total amount borrowed by a borrower from a creditor or financial institution.
On a related note, there exist an inverse relationship between the quantity of money demanded by a borrower and the interest rate charged by a creditor or lender. Thus, when the interest rate is high, the quantity of money demanded decreases (falls) while the quantity of money demanded increases (rises) when the interest rate is low.
In conclusion, borrowers are more likely to demand for money when the interest rate is low and vice-versa.
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It should be noted that there's an inverse relationship that exist between the quantity of money demanded and the interest rate.
Furthermore, on the demand curve for money, we can infer that when the interest rate increases, then the quantity of money that is demanded by households and firms will reduce.
On the other hand, when the interest rate reduces, then the quantity of money that is demanded by households and firms will increase.
It should be noted that option A and B are incorrect. Therefore the correct option is C.
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