A-LevelEconomicsThe macroeconomy9708/33 · Oct/Nov 2018 · Q261 Mark

The diagram shows that the elasticity of demand for money becomes infinite at a certain rate of interest. [Figure 26.1] Which statement explains this situation? A At low interest rates there is an infinite demand for bonds. B Other assets are close substitutes for money. C Some money is required for transactions balances. D There is a liquidity trap.

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Topic: The macroeconomy, A-Level Economics (syllabus 9708). Structured question, 1 mark.
Source: A-Level Economics, Oct/Nov 2018 Paper 3 Variant 3, question 26.

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