True or false then EXPLAIN why. Since many forms of money do not earn interest, people's demand for money is unaffected by changes in interest rates. HTML EditorKeyboard Shortcuts

False

Explanation:

It is true that many forms of money do not earn interest. However, it is not true that this means that people's demand for money is unaffected by changes in interest rates. One of the ways interest rates can change the demand for money is because this can influence the way people divide their money. When a person has money, he can decide whether to keep this in teh form of money, or whether to keep wealth through another asset. When interest rates decrease, people are more likely to keep money in the form of money, as opposed to other assets. This is the source of the demand for money.

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