- CFA Exams
- CFA Exam: Level I 2021
- Study Session 5. Economics (2)
- Reading 16. Monetary and Fiscal Policy
- Subject 2. The Demand for and Supply of Money
CFA Practice Question
The quantity of money that people plan to hold depends on all of the following except the ______.
B. price level
C. interest rate
A. velocity of circulation
B. price level
C. interest rate
Correct Answer: A
One more factor in this decision is real GDP.
User Contributed Comments 3
| User | Comment |
|---|---|
| VikramJ | Couldn't you argue that velocity of circulation does effect the amount of money demanded? Higher velocity can cause inflation, which causes people to demand more money... |
| gill15 | confused....that quantity of money people wish to hold is Money Demand. Money Demand M(Y,r,P) is an increasing function of GDP, decreasing function of interest rates and an increasing function of price. What am I missing here? How is this answer correct? |
| gill15 | Never mind...didnt read which selection was wrong. Thought it said C. Idiot. |