Which of the following best describes the relationship between money demand and interest rates?

The relationship between money demand and interest rates is usually inverse, meaning that when interest rates go up, the demand for money tends to go down, and vice versa. This happens because higher interest rates make it more expensive to borrow money, so people and businesses might prefer to save their money to earn interest instead of holding onto cash. For example, if a bank offers a higher interest rate on savings accounts, people might choose to deposit their money there rather than keeping it in cash, as they want to earn more from their savings. Conversely, when interest rates are low, people are more likely to hold onto cash since there’s less benefit to saving. This relationship helps explain how changes in interest rates can affect overall economic activity.