Asked by Austin Braun on May 26, 2024
Verified
Statement I: As the level of income rises,people tend to hold more money.
Statement II: People tend to hold less money as credit availability increases.
A) Statement I is true and statement II is false.
B) Statement II is true and statement I is false.
C) Both statements are true.
D) Both statements are false.
Credit Availability
The ease with which individuals or companies can obtain loans or other forms of credit from financial institutions.
Income Level
The term income level refers to the amount of money earned by an individual, household, or economic entity within a specific period, often categorized for statistical analysis.
- Comprehend the reactions of money supply and demand to fluctuations in price levels and the accessibility of credit.
- Understand the elements that impact the reasons for retaining currency.
Verified Answer
SG
Shamini GovindasamyMay 28, 2024
Final Answer :
C
Explanation :
Both statements are true. As income levels rise, people generally have more disposable income, leading them to hold more money. Similarly, as credit availability increases, individuals may rely more on credit for transactions and emergencies, reducing the need to hold large amounts of cash.
Learning Objectives
- Comprehend the reactions of money supply and demand to fluctuations in price levels and the accessibility of credit.
- Understand the elements that impact the reasons for retaining currency.