As interest rates rise, the quantity of money people wish to hold

1. Holding money means forgoing the interest a deposit would pay. 2. Higher interest rates make that sacrifice larger. 3. People therefore hold less money, so demand **falls**. 4. A rise in income, not in interest, is what pushes money demand up, which is the confusion the other options invite. _Source: syllabus Introductory Macroeconomics, Ch 3 "Money and Banking", section 3.2 DEMAND FOR MONEY AND SUPPLY OF MONEY_