Holding all else constant, the quantity of money demanded willA. Decrease as the supply of money increases.B. Increase as the supply of money increases.C. Increase as the money supply decreases.D. Decrease when the speculative demand increases.
B. Increase as the supply of money increases.
Option B. Increase as the supply of money increases.
The quantity of money demanded refers to the amount of money that an individual or household is willing to hold at a given time. Holding all else constant, the relationship between the quantity of money demanded and the supply of money is inverse. In other words, if the money supply increases, all else being equal, the quantity of money demanded will also increase. This is because with an increase in the money supply, people have more money to spend, and thus the demand for goods and services will also increase. To satisfy this increased demand for goods and services, people will need more money, which will result in an increase in the quantity of money demanded. The opposite is true when the money supply decreases, the quantity of money demanded also decreases.
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