Final answer:
On the demand and supply of money diagram, the vertical axis measures the interest rate, which represents the price of borrowing or lending money.
Step-by-step explanation:
On the demand and supply of money diagram, the vertical axis typically measures the interest rate. This rate represents the cost of borrowing money or the reward for lending it. In the context of the money market, the interest rate is the price of money, as it influences how much people are willing to hold in liquid form versus investing or depositing it to earn a return.
According to Figure 4.9, which shows a generic demand and supply curve, the vertical axis can represent various measures of price, including, in the context of financial markets, the interest rate. These principles are directly applicable to Figure 4.5, which illustrates the financial market for credit cards, where the vertical, or price axis, specifically shows the rate of return measured by the interest rate for money loaned or borrowed in that market.