In keynes's analysis of the speculative demand for money, what will happen to money demand if people suddenly decide that the normal level of the interest rate has declined? why?
a. money demand will increase because people will want to borrow more money.
b. money demand will stay the same because the speculative component of the demand for money is viewed as insensitive to interest rates.
c. money demand will decrease because as interest rates fall, the price of bonds rises. the relative increase in the expected return on bonds makes money less attractive.
d. money demand will increase because as interest rates fall, the price of bonds falls. the relative decrease in the expected return on bonds makes money more attractive.