The Reason That Velocity Increases When Interest Rates Rise Is

Multiple Choice

The reason that velocity increases when interest rates rise is

A) the Fed encourages banks to turn money in faster for recycling, which causes money to move faster.
B) the opportunity cost of saving increases, so people hold smaller cash balances.
C) home mortgage payments increase, so people write larger checks that reduces their checking account balances.
D) the opportunity cost of holding money increases, so average money balances decrease.