Explain how the following events will affect the demand for money according to the portfolio theories of money? demand:
1. The economy experiences a business cycle contraction.
A. The demand for money decreases during recessions.
B. The demand for money increases during recessions.
C. The demand for money does not change.
D. There is not enough information provided to determine the effect on money demand.
2. Brokerage fees rise?, making bond transactions more expensive.
A. The demand for money does not change.
B. The demand for money decreases.
C. The demand for money increases.
D. There is not enough information provided to determine the effect on money demand.
3. The stock market crashes.
?(?Hint: Consider both the increase in stock price volatility following a market crash and the decrease in wealth of? stockholders.)
A. The demand for money decreases.
B. The demand for money increases.
C. The demand for money does not change.
D. There is not enough information provided to determine the effect on money demand.