The quantity of money demanded to satisfy transactions needs:
A) is intended for unexpected expenditures.
B) increases with the level of real GDP.
C) decreases with the level of real GDP.
D) is unrelated to either national income or the interest rate.
E) varies inversely with the liquidity demand for money.

Question

Quizplus · Accepted Answer

As real GDP increases, the number of transactions in the economy also increases, which in turn leads to an increase in the quantity of money demanded to satisfy transactions needs.

The Quantity of Money Demanded to Satisfy Transactions Needs