Question

During periods of rising inflation and rising interest rates we expect the demand for real cash to
1)fall
2) Rise
3)Flutuate

4) Not changes​

Answer 1

Answer:

option B is the write answer

Explanation:

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Answer 2

During periods of rising inflation and rising interest rates we expect the demand for real cash to 1) fall.

Explanation:

• When inflation expectations rise, investors, all else being equal, desire a higher interest rate on their investment to compensate for the lost value.
• Bond demand is declining, bond prices are falling, and interest rates are rising.
• When inflation exceeds the rate of return on these assets, they lose value. People hurry to sell them, causing their value to plummet even lower.