Javier has been thinking about purchasing a bond but is afraid that the bond will lose value. He has decided to hold money instead. This is known as the
A) money balance demand for money. B) precautionary demand for money.
C) transactions demand for money. D) asset demand for money.
Question 2
If the nominal interest rate falls, everything else remaining unchanged, ________.
A) the real interest rate will rise B) the inflation rate will decrease
C) the real interest rate will remain unchanged D) the real interest rate will fall
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