According to Liquidity-Preference Theory, Why Is the Money-Demand Curve Downward

Multiple Choice

According to liquidity-preference theory, why is the money-demand curve downward sloping?

A) because interest rates rise as the Bank of Canada reduces the quantity of money demanded
B) because interest rates fall as the Bank of Canada reduces the supply of money
C) because people will want to hold less money as the cost of doing so falls
D) because people will want to hold more money as the cost of doing so falls