When the interest rate falls, how does the opportunity cost of holding money and the quantity of money demanded change? Question content area bottom left Part 1 Draw a demand for money curve and label it MD. Draw a point at an interest rate of 5 percent a year. Draw an arrow on the MD curve to show the effect of a rise in the interest rate above 5 percent a year. Label it 1. Draw an arrow on the MD curve to show the effect of a fall in the interest rate below 5 percent a year. Label it 2. Part 2 When the interest rate falls, other things remaining the same, the opportunity cost of holding money _______ and the _______. A. falls; quantity of money demanded increases B. rises; quantity of money demanded decreases C. falls; demand for money increases D. rises; demand for money decreases