Recall the Application about the possible link between interest rates and commodity prices worldwide to answer the following question(s).According to this Application, which is a theoretical explanation for why commodity prices rise with expansionary monetary policy?
A. Lower interest rates lower the cost of holding commodities in inventories, resulting in an increase in the commodity demand.
B. Lower interest rates raise the cost of holding commodities in inventories, resulting in an increase in the commodity demand.
C. Higher interest rates lower the cost of holding commodities in inventories, resulting in an increase in the commodity demand.
D. Lower interest rates lower the cost of holding commodities in inventories, resulting in a decrease in the commodity demand.
Answer: A
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