Explain why money demand depends on interest rates, income, prices, and the opportunity cost of holding money, then interpret money-market equilibrium graphs.
The money demand curve is downward sloping because
the transaction demand for money decreases as interest rates fall
people hold less money as the opportunity cost of holding money rises
money is less liquid as interest rates rise, so people are able to hold less of it
banks are more willing to create money when interest rates fall
with higher incomes, people are willing to hold smaller percentages of their money
B